Icahn's bid to split Time Warner draws lukewarm response
New York, USA: Long time corporate raider, Carl Icahn has called on Time Warner, the world's largest media company, to split itself into four separate companies and make stock buybacks totalling about US$20bn. Market analysts however were skeptical whether the plan would receive approval on the street.

Icahn yesterday delivered the report he had commissioned from investment bank Lazard. The report accused Dick Parsons, Time Warner's chief executive, of underestimating the group's financial capacity, missing market opportunities, failing to cut costs and under-investing in businesses, particularly the AOL internet unit.

"Time Warner has been managed for the short term," Bruce Wasserstein, the Lazard banker who prepared the 343-page dossier, told investors at a meeting in Manhattan yesterday. "This has damaged the company's fundamental competitive position and its prospects for growth. This approach has cost shareholders a staggering US$40bn."

The report argued that splitting Time Warner into four separate publicly listed companies -- a film and TV company, a publisher, a cable operator and AOL - would make each unit more nimble and better equipped to compete in their markets. The report also claimed that investor value was being destroyed because the market cannot attach a single value to such disparate assets.

In response, Time Warner said it would review the plan but rejected the criticisms. "Our board and management regularly review all of the strategic options for managing this company," it said in a statement. "We are on the right path. The company is delivering."

Time Warner has already advocated buying back US$12.5bn in shares and spinning off a 16 per cent stake in Time Warner Cable. The company said last week that its pace of stock repurchases would double over the next three months.

The Lazard report asserts that a proposed breakup of the Time Warner empire would boost the company's stock price by between US$5 and US$8 a share. Market trade in shares of Time Warner showed little reaction to the report's publication yesterday.

The Lazard report is part of Icahn's moves to elect an alternative group of directors at Time Warner's shareholder vote in the spring. The raider, who holds about 3.2 per cent of the company, has so far struggled to gain popular support with his campaign.
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News Corp. triples Q2 profit
New York, USA: Rupert Murdoch's media company, News Corp. has said its second-quarter profit almost tripled, buoyed by asset sales and higher sales at its cable television networks.

Net income rose to US$1.08bn, or 33 cents a share, from US$386mn, or 13 cents, a year earlier, the New York-based company said today in a statement. Profit excluding the gain was 21 cents, even as sales rose 1.5 per cent to US$6.67bn.

Profit from the cable-networks business rose 15 per cent as Fox News Channel attracted more viewers and FX increased the fees it charges cable providers. Profit from News Corp.'s partially owned businesses, including satellite-television company DirecTV Group Inc. and British Sky Broadcasting, more than tripled, while the company's movie business stumbled.

Class A non-voting shares of News Corp., the fourth-biggest U.S. media company, rose at the New York Stock Exchange composite trading. The stock fell 17 per cent last year, compared with a 10 per cent decline at Time Warner Inc., the world's biggest media company.

News Corp.'s profit in the quarter ended Dec. 31 included a US$381mn, or 12 cent, gain from the sale of the TSL Education Ltd. business.

Profit at the film division, which includes the Twentieth Century Fox and Fox Searchlight studios, fell 26 per cent to US$299mn from a record US$407mn. No News Corp. films opened in the top spot at the box office during the quarter.
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Pfizer mulling sale of consumer division
New York: Pfizer Inc. on Tuesday said it was undertaking a strategic review, which may result in the company spinning off or selling its consumer products division, including brands like Listerine mouthwash and Colgate toothpaste.

The world's No. 1 drug maker, which said it also may retain the business, said it was undertaking the review to determine the value of the unit for shareholders at a time when market valuations are attractive for large, high-quality consumer businesses.

Pfizer is slated to issue financial forecasts for 2006 and 2007 at an analysts meeting on Friday and said it will provide an overview of its strategy at the meeting. The company withdrew its previous earnings forecasts last October, citing generic competition and other factors.

The company, which experienced dazzling earnings growth in recent years after two big mergers, saw its fortunes decline in 2005. In addition to competition from cheaper generics, consumer concerns about heart safety slashed demand for its Celebrex painkiller and also forced the company to withdraw its newer US$1.4bn-a-year Bextra painkiller after it was linked to an often-fatal skin disease.

Pfizer's consumer division, which had sales of US$3.88bn last year, includes other popular brands like Rolaids antacid and Sudafed cold pills.
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Nortel to settle shareholder suit through cash and shares
Washington, USA: Nortel Networks Inc. said Wednesday that it will pay US$575mn in cash and issue nearly 630 million shares to settle a pair of class-action suits arising from a financial scandal that occurred under former management.

Nortel said it has agreed in principle to resolve two lawsuits on the condition that the company reach a global settlement of all pending shareholder actions. Investors sued Nortel after the equipment vendor was forced to revise financial results as far back as 2001.

Under the agreement, Nortel would make a large cash payment and issue 628.7 million common shares -- the equivalent of 14.5% of the company's outstanding stock -- to investors. Part of that cost may be covered by insurance, the company said.

In addition, Nortel would contribute half of any cash recovered from three former executives that the vendor has sued in connection with the scandal.

Nortel fired CEO Frank Dunn in April 2004 after the accounting scandal was uncovered. Other senior executives, including Douglas Beatty and Michael Gollogly, were also fired. All three have been sued by Nortel.

In just a few years, the company's revenue has fallen from an all-time peak of nearly US$28bn to an estimated US$11.1bn in 2005 amid a sharp decline in network spending and an onslaught of fierce competition.
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