RIM shares jump on report of sale efforts

(Reuters) - Shares of Research In Motion jumped more than 10 percent on Tuesday after a tech blog said the BlackBerry maker was actively seeking to sell itself to South Korean smartphone rival Samsung Electronics.

The Boy Genius Report website cited an unidentified source saying that RIM co-Chief Executive Jim Balsillie was meeting with companies interested in either licensing its software or buying a part or all of RIM, with Samsung leading the pack.

Jefferies analyst Peter Misek later said the report of the Samsung talks was likely true but that licensing deals for RIM's upcoming phone software was a more likely scenario and would in turn lead to a major restructuring.

A Samsung spokesman and a RIM spokeswoman both declined to comment.

RIM has been the target of a steady stream of takeover speculation in recent months as its market valuation has crawled along at multi-year lows. Product delays and profit warnings have eroded confidence in RIM and its management.

Samsung, which has emerged as the No. 1 smartphone manufacturer on the back of booming demand for its Android-based models, said on Tuesday it plans to merge its own "bada" operating system with an open-source platform supported by chipmaker Intel.

Android, the world's most popular smartphone operating system, is owned by Google and used by a slew of handset manufacturers, including Motorola Mobility and HTC, as well as Samsung.

Jefferies' Misek said Samsung and HTC might both be interested in paying RIM $10 per device to use its fresh operating system. That would give them access to the 75 million-plus BlackBerry users and limit their dependence on Android.

He said RIM could announce a deal within three months and the appointment of a new chairperson could speed up the process.

Balsillie and fellow chief executive Mike Lazaridis also share a role as chairman of the board, but a committee made up of the rest of RIM's board is due to report on possible changes to the unusual structure by the end of January after pressure from investors.

RIM's stock has jumped more than 6 percent four times since December 21, when Reuters reported that Amazon.com and other possible buyers had considered a bid. It is still down almost 75 percent from a year ago.

RIM's Nasdaq-listed shares were up 10.3 percent at $17.83 by early Tuesday afternoon, while the Toronto-listed stock rose 7.6 percent to C$18.15, adding to its gains on Monday when U.S. markets were closed.

(Reporting by Alastair Sharp; Editing by Frank McGurty)
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Romney unscathed from debate attacks

MYRTLE BEACH, South Carolina (Reuters) - Republican presidential hopefuls attacked Mitt Romney's record in business and government on Monday and challenged him to release his tax returns, but the front-runner emerged largely unscathed from a South Carolina debate.

Newt Gingrich, Rick Perry and Rick Santorum questioned Romney's accomplishments and urged voters to take a critical look at the former Massachusetts governor as they tried to halt his growing momentum in the race to pick a challenger to President Barack Obama.

"We need to satisfy the country that whoever we nominate has a record that can stand up to Barack Obama in a very effective way," said Gingrich, the former House speaker, defending his questions about Romney's work at a private equity firm that critics say slashed jobs and plundered companies.

"There was a pattern in some companies, a handful of them, of leaving them with enormous debt and then within a year or two or three having them go broke. I think that is something he ought to answer," he said.

Romney's firm, Bain Capital, has become a flashpoint in the race in recent weeks, although the candidates have eased off their criticism on the campaign trail at the urging of some Republicans.

Romney defended his record at Bain, saying he invested in more than 100 businesses and had a mixed but overall successful record of job creation.

"If people want to have someone who understands how the economy works, having worked in the real economy, then I'm the guy who can best post up against Barack Obama," Romney said.

Just hours before the debate former Utah Governor Jon Huntsman dropped out of the Republican race and endorsed Romney, bolstering his drive for his party's nomination. Romney won the first two state nominating contests in Iowa and New Hampshire this month.

Romney leads polls in South Carolina, and a win here on Saturday would put him on an almost certain path to clinching the nomination to face Obama in November.

The candidates will get another crack at Romney at a debate in Charleston on Thursday, less than 48 hours before South Carolina Republicans start voting.

TAX RECORD DEBATE

Perry, the Texas governor, challenged Romney during the nearly two-hour debate to release his tax returns. Perry and Gingrich have been raising the issue on the campaign trail in the last few days.

"I hope you'll put your tax records out there this week so the people of South Carolina can take a look and decide if, you know, we've got a flawed candidate or not," Perry told Romney.

Romney did not firmly commit to releasing his records but said historically candidates have released them around April. "That's probably what I'll do," he said.

Santorum, a former U.S. senator who is battling Gingrich and Perry for the support of conservatives unwilling to back the more moderate Romney, criticized Romney's Super PAC funding group for airing ads that he said made false claims about his record.

Romney said he had no control over the outside Super PAC, which has spent millions in Iowa, New Hampshire and South Carolina on tough ads criticizing Gingrich and Santorum.

"If they ever run an ad or say something that is not accurate, I hope they either take off the ad or make it correct," Romney said.

Gingrich drew a standing ovation from a crowd drawn heavily from a convention of conservative Tea Party activists in Myrtle Beach when he defended past comments about the poor that a moderator said could be viewed as insulting.

"I believe every American of every background has been endowed by their creator with the right to pursue happiness," he said. "If that makes liberals unhappy, I'm going to continue to find ways to help poor people learn how to get a job, learn how to get a better job and learn someday to own the job."

Libertarian U.S. Representative Ron Paul drew boos from the crowd during a discussion of Afghanistan and the Taliban when he said the United States should be careful about intervening in foreign lands.

"This country doesn't need another war," he said. "We need to quit the ones we're in."

Perry said the federal government had become too intrusive into state affairs, and cited efforts in South Carolina to block the institution of a new voter law that requires photo identification to vote.

"I'm saying the state of Texas is under assault by federal government. I'm saying also that South Carolina is at war with this federal government," he said.

(Editing by Alistair Bell and Jackie Frank)
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Microsoft plans sweeping pay raises: CEO memo

SEATTLE (Reuters) - Microsoft Corp plans to broadly raise salaries and stock awards to attract and retain top talent, Chief Executive Steve Ballmer said in an internal memo obtained by Reuters on Thursday.

Microsoft, which like Silicon Valley companies Google and Yahoo risks losing top employees to hot upstarts like Facebook, must improve the way it rewards and support its most talented staff, Ballmer said.

"Through our history, we have been THE place people came when they wanted to make a difference in the world through software, hardware and services," the chief executive said in a memo sent to all employees on Thursday morning.

"This is as true today as it has been at any time in our history, and the changes we're rolling out today will help ensure Microsoft continues to be the place that top talent comes to change the world."

The action follows Google's 10 percent increases this year. Microsoft plans, among other things, "important" compensation increases for divisions with fast-moving markets, including research and development and certain geographies.

All employees will have a portion of their stock awards shifted into base salary, according to the memo. Microsoft's shares are at the same level as 10 years ago.

The company will tie bonuses and stock awards closer to performance, with the review process also undergoing changes, Ballmer said.

Microsoft suspended merit-based pay raises for all employees two years ago, when it laid off 5,000 workers, or about 5 percent of staff, to cut costs. It brought back what it calls "modest" merit raises in 2010.

Last year it told employees they would have to contribute to health insurance for the first time, beginning in the next couple of years.

The changes will occur around September, according to the memo. Microsoft's shares closed down 0.9 percent at $25.52.

(Writing by Edwin Chan; Editing by Steve Orlofsky)
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Citi profit sags as revenue shrinks, expenses grow

By Maria Aspan

NEW YORK (Reuters) - Citigroup Inc's first-quarter profit fell 32 percent as shrinking loans and poor trading results pressured revenue while expenses surged.

The results highlighted how the third-largest U.S. bank, which teetered on the brink of collapse in the financial crisis, has stabilized but is still struggling to generate real growth.

The results were better than expected, which supported Citigroup's stock on a day when the U.S. equity market was falling. But like other big banks, the company's profit came mainly from dipping into money previously set aside to cover bad loans.

"We're not seeing a lot of revenues being thrown off by main businesses ... They haven't been able to turn recovery into growth," said Len Blum, a managing partner of investment firm Westwood Capital, who personally owns bank stocks.

All three of the biggest U.S. banks -- Bank of America, JPMorgan Chase and Citigroup -- have posted shrinking loan books for the first quarter, raising questions about the strength of U.S. economic growth.

The biggest boon for banks right now is that credit losses are dropping. Citigroup's credit losses fell 25 percent in the quarter and steadily declined all last year.

Citigroup is among the most international of the major U.S. banks, and that helped some businesses in its Citicorp unit, where the bank houses the operations it plans to continue operating over the long term.

That unit's Latin American consumer banking, investment banking and transaction-processing services all posted higher income from continuing operations, for example, even as North American investment banking and transaction-processing operations posted profit declines.

BEATING ESTIMATES

Overall, Citigroup earned $3.0 billion, or 10 cents per share, in the first quarter, beating analysts' average forecast of 9 cents a share, according to Thomson Reuters I/B/E/S. A year earlier it earned $4.4 billion, or 15 cents per share.

Revenue dropped 22 percent, including a 29 percent drop in its fixed income trading revenue. [ID:nN18189626]

The slump in trading revenue reflected a volatile quarter in the markets, driven by Middle Eastern political upheaval and a Japanese earthquake and tsunami. That market environment is also expected to dampen profits at top U.S. investment banks Goldman Sachs Group Inc and Morgan Stanley, which report their quarterly results later this week.

On a conference call with investors, Chief Executive Vikram Pandit said the bank is building its investment banking franchise. Operating expenses rose 7 percent to $12.33 billion.

It is a reversal for Pandit, who spent his first few years at the helm slashing costs in an effort to right the foundering bank.

Under prior executive Charles "Chuck" Prince, investors and analysts criticized the bank for having bloated expense levels even when revenue was rising.

Citigroup's expenses rose in part due to higher legal expenses, though Chief Financial Officer John Gerspach declined to identify the source of those higher legal expenses on a conference call with reporters.

But he said the bank will incur $25 million to $30 million in annual costs, as well as one-time charges of up to $50 million over the "next few quarters," related to a foreclosure-related settlement with bank regulators.

Last week, 14 banks including Citigroup agreed to overhaul their mortgage operations and compensate borrowers who were wrongly foreclosed upon, as part of a settlement with bank regulators. [ID:nN13259474]

Gerspach said Citigroup would hire up to 500 people as part of the settlement.

Citigroup is also trying to rid itself of underperforming home loans. Gerspach told analysts that the bank has sold $10 billion worth of mortgages from Citi Holdings over the last five quarters. Citi Holdings is where the bank houses assets and businesses it plans to shed.

RECOVERY TO GROWTH

In 2010, the bank posted its first annual profit since 2007, showing that Pandit had turned the bank around after it received $45 billion of government funds over the course of three rescues.

By the end of 2010, the government had shed its common shares in Citigroup, and last month the bank reinstated a nominal dividend and said it would reduce its number of shares outstanding through a reverse share split in May.

But Pandit still has to prove that Citigroup can move past recovery to growth, despite broad challenges facing the banking industry's attempts to boost profits.

Citigroup shares are still relatively cheap, trading at about 0.76 times their book value, according to Nuveen Investments analyst Alan Villalon. Bank shares generally are trading between 1.2 to 1.3 times stated book value, he said. Some investors have been buying Citi shares because they look relatively undervalued.

Citigroup did add assets to its balance sheet in the first quarter, bringing its total assets to $1.33 trillion, a 3.6 percent increase from the fourth quarter of 2010.

But loans fell 1.8 percent from the fourth quarter, with gains in assets coming from areas like trading account assets.

Citigroup shares closed on Monday unchanged at $4.42.

Regional banks KeyCorp and M&T Bank Corp, which also reported first-quarter results on Monday, both also beat estimates, and both reported lower loans on their books compared with the fourth quarter.

(Reporting by Maria Aspan; additional reporting by Joe Rauch in Charlotte and Lauren Tara LaCapra in New York; Editing by Tim Dobbyn and John Wallace)
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Wall St set for lower open on Japan, earnings concerns

By Angela Moon

NEW YORK (Reuters) - Wall Street was poised for a lower open on Tuesday in the wake of a disappointing revenue miss from Alcoa and Japan's upgrade of the severity of its nuclear crisis.

Investors were cautious after Japan raised the severity of the Fukushima nuclear power plant accident to the highest level on the International Nuclear and Radiological Event Scale, putting it on par with the Chernobyl 1986 disaster.

The stock market showed a muted reaction to a government report showing the U.S. trade deficit shrank in February, with both imports and exports falling, which suggested a slowdown in global demand.

There was also concern because Alcoa Inc (AA.N) , after the closing bell on Monday, reported revenue that missed forecasts, which sent the company's shares lower in post-market trade despite its reporting a first-quarter profit above expectations.

Mining stocks will be in focus as metals prices fell on worries Japan's massive earthquake and a nuclear crisis would weaken recovery prospects in the world's third-largest economy.

Selling in key commodities were also triggered after Goldman Sachs (GS.N) warned its clients to lock in trading profits before oil and other markets reverse. U.S. traded shares of Rio Tinto (RIO.N) fell 2.3 percent to $72.10 in premarket trade.

"There's been an undercurrent of selling in the market this last week. The tone appears to be becoming more negative. Risk levels appear to be rising. The next few days are going to be important; if we don't get a bounce from these oversold levels, that's a negative," said Wayne Kaufman, chief market analyst at John Thomas Financial in New York.

Brent crude futures pushed up to around $124.50 a barrel on Tuesday, edging up from a sharp fall, as the International Energy Agency issued a fresh warning that high prices could erode demand.

S&P 500 futures fell 8.1 points and were below fair value, a formula that evaluates pricing by taking into account interest rates, dividends and time to expiration on the contract. Dow Jones industrial average futures lost 68 points and Nasdaq 100 futures shed 13 points.

Looking at merger and acquisition news, two sources familiar with the matter told Reuters that Hewlett-Packard Co (HPQ.N) had considered buying business software company Tibco Software Inc (TIBX.O) until two weeks ago when talks fizzled.

In other corporate news, Chevron Corp (CVX.N), the second-largest U.S. oil company, said first-quarter exploration and production earnings would be higher than in the previous quarter.

Also, The Wall Street Journal reported that the Bank of America Corp's (BAC.N) internal auditors are reviewing why its chief financial officer and chief accounting officer were not consulted before the bank disclosed to investors that its dividend increase had been rejected by regulators.

U.S. stocks mostly fell on Monday, with energy shares selling off on lower oil prices and concerns that company outlooks may fall short of expectations.

(Reporting by Angela Moon, Editing by Chizu Nomiyama)
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Apple to stay ahead in tablet boom: Gartner

By Tarmo Virki and Miyoung Kim

HELSINKI/SEOUL (Reuters) - Apple's iPad will continue to dominate the surging media tablet market for years, with Google playing catch-up, research firm Gartner said on Monday.

Gartner said it expects 70 million media tablets to be sold this year and 108 million in 2012, compared with just 17.6 million in 2010.

Apple's share of the market will gradually decline to 47 percent in 2015 from 69 percent this year, while Google's share will rise to 39 percent from 20 percent now.

Google's Android has stormed the smartphone market, where it will become the No 1 platform this year, and it has emerged as the only viable solution for tablet-makers who do not own their own operating system.

Research In Motion's QNX platform, used in its soon-to-be-launched PlayBook tablet, will take the No.3 position on the market this year, with a 5.6 percent share. Gartner sees that rising to 10 percent in 2015.

"It will take time and significant effort for RIM to attract developers and deliver a compelling ecosystem of applications and services around QNX to position it as a viable alternative to Apple or Android," Gartner analyst Carolina Milanesi said.

"It will be mainly organizations that will be interested in RIM's tablets because they either already have RIM's infrastructure deployed or have stringent security requirements," she said in a statement.

DISTANT NO. 2 IN HARDWARE - SAMSUNG

Apple is estimated to have sold about 1 million iPad 2's in the first weekend of its U.S. launch early last month. By comparison, its closest rival in hardware, Samsung Electronics

may have sold a similar number of Galaxy Tabs in the past three months and sales growth is expected to remain weak.

Slow sales of Tab, coupled with aggressive pricing plans of iPad2, is pressuring profit growth at Samsung.

Samsung, the most aggressive contender to Apple with three different sizes of tablets, is still playing catch-up and analysts expect the firm, which uses Google's Android in its tablets, to increase marketing expenses to boost sales.

"Their biggest challenge is user interface, how they are going to make their devices any different from those of Motorola

or HTC," said Milanesi.

Samsung is widely known as one of the fastest followers in the fickle electronics industry. To better compete with Apple, Samsung redesigned its new 10.1-inch tablet, first introduced in February, in just weeks to make it the thinnest in the category after Apple set the trend with the slimmer iPad 2.

Samsung's follow-up models will be on the market in June at the earliest, three months after iPad 2's rollout.

"Expectations for tablets have driven Samsung shares since November, but it has so far failed to live up to that expectation. Whether Samsung's share can rise again will largely depend on how strongly its follow-up tablet models do in the market," said Lee Seung-woo, an analyst at Shinyoung Securities.

(Editing by Jon Loades-Carter and Erica Billingham)
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Vodafone SFR deal reflects wider industry changes

By Kate Holton and Leila Abboud

LONDON/PARIS (Reuters) - Vodafone's exit from France's SFR marks another step in the revamp of its portfolio and reflects how Europe's telecom giants are ditching weaker assets to achieve scale elsewhere ahead of a wave of big investments.

The long-awaited 7.95 billion euros ($11.31 billion) sale of Vodafone's 44 percent stake in SFR to Vivendi comes two weeks after Deutsche Telekom AG agreed to sell out of the U.S. for $39 billion.

Vodafone also recently agreed to buy out its Indian partner for a $5 billion price tag to increase its exposure to the world's fastest-growing mobile market.

This recent flurry of deal-making reflects a move by telecom firms to counter sluggish growth and respond to threats from new entrants, such as Google and Apple who are eating in to mobile profits.

With consumers using more smart phones and tablet computers, data is exploding on networks, raising the need for investment.

To cope, telecom operators, such as Vodafone and Deutsche Telekom, are cutting down their portfolios to focus on markets where they can achieve scale, unwinding aggressive international expansions undertaken a decade ago.

Vivendi's move for SFR will increase its cash flows and profits, giving it more firepower to fend off increasing competition in the French telecoms market and spend to acquire precious fourth generation mobile spectrum this summer.

The telecom giants are also returning money to shareholders in a bid to placate them before undertaking large investments in mobile and fixed networks as well as spectrum auctions now underway in the U.K., France, and Spain.

Vodafone and Deutsche Telekom both pledged multi-billion euro share buybacks after their deals, while Vivendi signaled that the SFR buyout would lead to an increase in its dividend.

Shares in Vodafone, the world's largest mobile operator by revenue, have risen almost 30 percent since it indicated its new strategy in July 2010, while Vivendi and Deutsche Telekom shares also got a boost from the recent deals.

Robin Bienenstock, analyst at Sanford Bernstein, said more such deals could be in the offing.

"You're going to see a massive portfolio cleanup among telecom operators because they need capital to reinvest in their core networks," she explained.

"The only way to do that is to jettison the weak stuff and plough money into the markets where you are stronger -- this is a scale game."

The deals also reflect the fact there are fewer acquisition targets in high-growth emerging markets, leading Europe's telecom giants to turn their focus to more mundane matters such as managing their home markets and improving balance sheets.

Consultants PRTM said such deals showed telecom firms were now more interested in national depth than global reach.

For Vodafone, the SFR deal marks the latest and largest move in its strategy to sell minority stakes it does not control.

Responding to investor pressure, Vodafone has already sold a minority stake in China Mobile, sold interests in Japanese carrier SoftBank and begun a sale process of the nearly 25 percent it owns of Poland's Polkomtel.

The only major issue outstanding is its need to secure a dividend from its U.S. joint venture with Verizon, Verizon Wireless, where it is a minority owner. Some have speculated that the two giants could one day merge instead.

For Vivendi, the deal brings closer its vision of a new-look group with higher cash flows, more exposure to telecoms and its mature home market of France.

However analysts said Vivendi had paid a full price for the 44 percent stake -- 7.75 billion euros plus 200 million euros to reflect the generation of cash between January and July 2011.

Shares in Vodafone rose over 2 percent in early trading before settling to be up 0.8 percent, while Vivendi fluctuated, falling 1 percent before recovering to be up 0.9 percent.

"Initially, the market may react positively to the SFR buyout," said Polo Tang at UBS. "However, we think Vivendi has potentially paid a premium multiple to almost double its exposure to an asset seeing intensifying competition."

In slides posted on Vivendi's website, the company predicted that the deal would boost its 2011 adjusted net income by 15-18 percent. It also said the deal would add at least 600 million euros to its adjusted net income in 2012 and 2013, with some 350 million euros on a recurrent basis.

Vivendi also reassured investors that the deal would be financed without a share issuance and said it expected its credit rating of 'BBB' to remain unchanged.

Some also expect the deal to help Vivendi's stock by reducing the conglomerate discount long put on the shares of anywhere up to 20 percent due to the fact the parent company did not have access to all the cash flows of its various divisions.

($1=.7031 euros)

(Editing by Greg Mahlich and Louise Heavens)
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