News on Japn from FT:
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WEDNESDAY OCTOBER 28 1998 Asia-Pacific
Tokyo plans big stimulus package
By Gillian Tett in Tokyo
<Picture: Japan>The Japanese government yesterday pledged to produce a further emergency stimulus package, worth at least ¥10,000bn (£50bn) next month to boost the country's ailing economy.
The Economic Planning Agency said it expected the ¥10,000bn to include ¥4,000bn more in public spending works, and targeted tax cuts and other measures to boost home buying. These measures may be partly aimed at helping to boost housing in urban areas, it said.
The move came amid more signs of Japan's economic pain. The government reported that unemployment remained at a post-war high of 4.3 per cent in September, while employment at big companies fell for the first time for 13 months. Car production fell 12 per cent and car exports 5 per cent, in the six months to September.
Keizo Obuchi, prime minister, told a cabinet meeting yesterday: "Given the very severe conditions in the Japanese economy, I have resolved to. . . compile an emergency economic stimulus budget." The package would be the third budget compiled in the current business year.
Many economists remain sceptical about the effectiveness of the latest measures, given previous stimulus packages had limited success in boosting the economy. Recent public funding pledges have been undermined because local government bodies have been reluctant to implement central government spending plans.
Government officials yesterday argued the new measures would be sweeping enough to pull the country out of recession. Taichi Sakaiya, head of the Economic Planning Agency, said: "We must avoid a third consecutive year of negative economic growth and achieve positive growth next fiscal year."
The new stimulus package, like earlier ones, will be drawn up by the central government but it is uncertain what role, if any, local government would play in building the new infrastructure.
The government is keen to produce concrete indications of how it will use the ¥10,000bn package by the middle of November or before it attends a summit of Asian leaders. This is to stave off criticism that Japan has not done enough to boost its economy.
The stimulus package, if it consists of new initiatives rather than a repackaging of previously announced plans, would follow a ¥16,700bn package unveiled earlier this year. The government had been diverted from considering further stimulus measures by a political battle over a separate ¥60,000bn package, which has now been approved, to support the country's ailing financial sector. .
The government will call an extraordinary parliamentary session to approve the latest budget, probably in late November, government officials said.
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And Nortel makes it into FT:
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WEDNESDAY OCTOBER 28 1998 Americas
Nortel shares soar 11%
By Scott Morrison in Toronto
Shares of Nortel Networks, the Canadian communications networking group formerly known as Northern Telecom, gained more than 11 per cent in early trading in Toronto on Tuesday after the group reported earnings that surpassed analysts' expectations.
Third-quarter earnings before special items rose to US$241m, or 42 cents a share, a 45 per cent increase on a per-share basis. Analysts had predicted earnings of about 37 cents a share. Nortel had net earnings of US$153m, or 29 cents a share, for the same period last year.
Including one-time gains and charges, as well as costs relating to recent acquisitions - such as its US$6.9bn acquisition of Bay Networks, the US data networking group - Nortel incurred a net loss of US$306m, or 54 cents a share.
The rebound in Nortel's shares came nearly a month after the company's stock fell almost 30 per cent over two days. The shares had plunged after Nortel officials told a meeting of analysts that revenues would not grow as quickly as anticipated.
Nortel shares were up C$6.10 at C$59 in midday trading. "It's as much a relief rally as anything. People were concerned there would be skeletons in the closet and that wasn't the case," said Mark Lucey, an analyst at Kearns Capital.
Nortel said revenues from continuing operations, including the debut contribution from Bay Networks, were up 20 per cent to $4.1bn, while orders grew 22 per cent.
As expected, Nortel's strongest revenue gains came from the broadband networks division and data networking operations.
But in Nortel's public carrier networks operation, which sells switches and other equipment to large telephone service providers, revenues fell 12 per cent.
Analysts have been concerned that Nortel might not be able to increase sales of wireless, broadband and data network equipment quickly enough to offset the decline in revenues from large US telecoms groups, which are consolidating and cutting costs as the market becomes more competitive.
In the third quarter, the company wrote down US$539m in acquisition-related costs, reflecting primarily the Bay Networks deal.
John Roth, Nortel chief executive, said the company would amortise the cost of the Bay acquisition over five years.
He underlined that the acquisition would be "modestly" accretive in 1999, because of high growth and high margins in the data networking segment.>>>
Also from FT, this on Teligent. Does anyone know whose fixed wireless they and Winstar are using?
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WEDNESDAY OCTOBER 28 1998 Americas
TELECOMS: Teligent takes wing to rally the Clecs
Launch is shot in arm for competitive local exchange carriers, writes Richard Waters
A fast-growing band of alternative local telephone carriers, which had been hit hard by the recent volatility in financial markets, received another shot in the arm yesterday with a formal launch of service by one of the most closely watched companies in the group.
The companies, known as competitive local exchange carriers, or Clecs, have sprung up in response to the deregulation of local telephone markets and the surge in demand from businesses for high-band-width data and video services.
However, their heavy reliance on the junk bond market, which has effectively been closed during the recent weeks of market upheaval, has raised concerns that some will eventually run out of cash.
Yesterday Teligent, which was formed two years ago with backing from the Japanese carrier NTT, announced the launch of its first services in 10 big US cities. The news prompted a 10 per cent jump in the company's shares during the morning and helped to propel other companies higher.
Teligent is one of a small group of companies that plan to use "fixed wireless" technology to hook business customers to its network. Rather than using optical fibre, the service relies on microwave links - a potentially far cheaper method of constructing a network.
Alex Mandl, who resigned as president of AT&T to start Teligent in 1996, said the company planned to complete a network in the 74 cities where it has wireless licences by the end of 2000.
Another company using similar technology, Winstar, is already further advanced in its roll-out, with plans to reach 100 cities by the end of 2000. Winstar's shares climbed more than 5 per cent yesterday morning.
Teligent and Winstar are among the best-financed Clecs, which has enabled them to bounce back more quickly than some others from the severe financing concerns that hit the sector earlier this month.
Teligent has raised $1.65bn in all since it was founded, enough to complete its construction phase over the next two years, said Mr Mandl.
Winstar, meanwhile, agreed a $2bn credit facility from Lucent Technologies last week, in part to build networks outside the US.
The Winstar financing had eased some of the concerns over whether fixed wireless technology would work as well as its supporters had claimed, said Venu Krishna, an analyst at Salomon Smith Barney.
Mr Mandl added that a successful roll-out of fixed wireless systems in the US could accelerate their construction in other countries, and that Winstar's deal with Lucent had proved that the capital was available to back such developments.
Some other well-capitalised Clecs also climbed yesterday, continuing the rebound from the lows hit early in October.
Shares in Nextlink, which was founded by Craig McCaw, who earlier built the country's first national wireless carrier, jumped 5 per cent during the morning.
Though one of the most capital-intensive of the Clecs, the company has $1.2bn of cash on hand, according to Salomon Smith Barney.
The recent collapse in Clec shares came in marked contrast to the fortunes of the established local carriers, of Baby Bells, whose monopoly of local US telephone markets was broken by the 1996 Telecommunications Act.
The Baby Bells have become a safe haven for stock market investors in recent months.
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