BARCELONA (Reuters) – The semiconductor industry is looking at first signs of recovery as it struggles to clear inventories of unsold chips stemming from a slowdown in consumer spending, industry executives said on Thursday.

The industry hit a slump as demand for consumer gadgets has slowed in Europe and elsewhere due to economic uncertainties at a time when vendors have invested heavily in the new production gear.

Chip designer ARM said it was optimistic that reductions in inventory by device makers, which is dampening demand for semiconductors, would be short-lived.

“We are seeing some ARM licensees looking beyond that and the body language is more positive than a quarter ago,” Chief Executive Warren East said on Thursday.

French chipmaker STMicroelectronics said it expects to return to normal business conditions in the second quarter of 2012 after inventory is cleared, its chief executive told an investor conference in Barcelona.

Comments of STMicroelectronics echoed research firm Gartner, which said it expected the inventory correction to continue to dampen sales prospects for at least the reminder of the year before sequential growth can return in 2012.

U.S. microcontroller maker Microchip called the bottom of the cycle when it reported third-quarter results earlier this month.

Microchip, often seen as a canary in the coal mine for the chip industry, said it expects the inventory burn-off to be largely over by the end of 2011 and anticipates the December quarter to mark the bottom of this industry cycle.

While STMicroelectronics forecast a continued slowdown in fourth-quarter sales when reporting weak results last month, CEO Carlo Bozotti said the company had seen an uptick.

“For a few weeks we have seen bookings increasing again,” Bozotti said, adding the orders were still at a low level and it was not clear how sustainable the trend was.

SMARTPHONES TO HELP FRAGILE RECOVERY

ARM, whose processor blueprints are licensed by chipmakers such as Texas Instruments and Samsung Electronics, said royalties would grow faster than the market in 2012, driven by hot smartphone products such as Apple’s iPhone 4S, which is powered by its designs.

“We expect next year to be another year of significant growth for smartphones,” East told the Morgan Stanley technology, media and telecom conference in Barcelona.

He said, however, that the number shipped would undoubtedly be affected by economic conditions.

In Taipei, ARM President Tudor Brown said he expected the semiconductor industry to grow “a few percent” in 2012.

Research firm IHS iSuppli on Thursday cut its forecast for growth of global semiconductor market in 2011 to just 1.2 percent from 2.9 percent growth it had forecast earlier.

IHS iSuppli said the weak economy would continue to depress consumer spending in 2012, the foremost driver of electronics and semiconductor market demand, leading to an “anemic” 3.2 percent for the chip industry.

“A return to stronger growth will not begin until 2013. However, any forecast for growth is cautious in nature as a number of factors threaten to drive the economy back into recession, which would push the semiconductor market into a double dip,” the researcher said.

(Editing by Maureen Bavdek)

Article source: http://news.yahoo.com/chip-industry-eyes-recovery-slowdown-200902952.html

TORONTO (Reuters) – Underperforming Canadian companies should brace for a wave of shareholder activism as investors try to wring value from portfolios that have been battered in a global market slump.

In the last few weeks alone, three top companies – BlackBerry maker Research In Motion , grain handler Viterra Inc and Canadian Pacific Railway – have faced highly public investor agitation, once a rarity in Canada.

In all three cases investors are unhappy with management strategies to reverse falling stock prices.

When management doesn’t respond, a full-scale proxy battle can ensue, as activists resort to shareholder votes to force management to boost dividends, change strategy or even to scupper an unwanted takeover. For the agitators, a successful fight often results in installing their own supporters on the board of directors.

“What’s happening is that funds, most of whom have never thought of being activist investors, are looking at their screens and seeing a lot of red,” said Walied Soliman, a partner at the Norton Rose Group and one of Canada’s leading proxy battle veterans at the tender age of 34.

“Investors are saying, ‘Some of this red, we can’t control,’ but they are also looking at some deeper reds and saying, ‘Why is this such a deep red? I know everyone is underperforming because of the markets but these guys are performing well below the market’,” he said.

Proxy battles have also emerged as a useful technique to court shareholders in hostile takeover situations.

A recent example is Wi-Lan’s unsuccessful bid for Mosaid Technologies , defeated by a white knight bid from Sterling Partners.

The London Stock Exchange’s failed in its attempt to take over TMX Group , Canada’s largest stock market operator, after a rival bidder persuaded enough shareholders to vote against the transatlantic deal.

GAINING STEAM

Proxy fights gathered momentum in Canada over the past decade in part because corporate governance reforms have made it easier to influence boards.

In keeping with the trend, the number of proxy advisory firms, which help activists garner support from major shareholders, has risen from one to four since 2003.

“It’s like an election campaign,” said Brad Allen, the senior vice-president at Laurel Hill Advisory Group. “Working for our candidate, we help refine the message, identify the constituency, reach out to determine sentiment, and develop dynamic polling results so our client knows in advance where they will likely end up at any point in time.”

As global markets weaken, shareholder activism is picking up steam in Canada after a slowdown. Experts predict 2012 might even mirror 2009, when a global liquidity crunch led to 40 Canadian proxy contests, the most in a decade.

“There’s an inverse correlation between stock performance and proxy contest activity,” said Allen. “As a result of the mixed market currently we’re seeing an increase in both proxy contests and unsolicited offers.”

U.S. HEDGE FUNDS

Viterra, Canada’s largest grain holder, announced plans this month to replace two of its board members after its top shareholder, the Alberta Investment Management Corp, called for a shakeup.

RIM, once a market darling, is under attack from a group of investors led by Jaguar Financial , which says it is leading a movement by shareholders representing more than 8 percent of RIM stock.

Jaguar is demanding sweeping change at the BlackBerry maker, or a sale of RIM as a whole or in parts.

Daniel Batista, a partner with the Fasken Martineau law firm in Toronto, attributes some of the growing appetite for shareholder activism in Canada to more investment by U.S. hedge funds with long experience in using activism as a tool to boost returns.

“I really do believe that a big part of it has been that the U.S. hedge funds have begun to come north of the border and do business here, and they’ve brought their attitude and style,” said Batista.

Last month Pershing Square Capital Management said it had acquired a 12.2 percent stake on Canadian Pacific, Canada’s No. 2 railway, which had previously announced falling profits and productivity.

Other prominent U.S. hedge funds that have been involved in proxy fights in Canada are Greenlight Capital, Passport Capital, Palo Alto Investors and Icahn Partners LP, which launched a failed bid and proxy battle against Lions Gate Entertainment .

Canada has had some 20 proxy fights so far this year, and that excludes activist movements that were resolved without a fight, according to data from several proxy advisory firms. That roughly matches the 2010 number.

Wes Hall, president and founder of Kingsdale Shareholder Services, expects the trend to keep gathering pace as investors tire of watching companies sit on cash hoarded over the recession.

“Shareholders look at that and say, either do a dividend or do something, an acquisition or something, otherwise I’m going to take charge of the board and I am going to do something with that money,” said Hall.

(Reporting by Pav Jordan in Toronto; editing by Frank McGurty and Jeffrey Hodgson)

Article source: http://news.yahoo.com/proxy-battles-loom-canadian-activists-grow-edgy-153257830.html

CINCINNATI (Reuters) – Former Procter Gamble chief executive John G. Smale, credited with transforming the two major international companies he led during his career, died on Saturday at age 84. Smale served as chief executive officer of Cincinnati-based Procter Gamble from 1981 to 1990. Under his watch, the company …

Article source: http://news.yahoo.com/research-firm-amazon-tablet-costs-201-70-135313045.html

CINCINNATI (Reuters) – Former Procter Gamble chief executive John G. Smale, credited with transforming the two major international companies he led during his career, died on Saturday at age 84. Smale served as chief executive officer of Cincinnati-based Procter Gamble from 1981 to 1990. Under his watch, the company …

Article source: http://news.yahoo.com/amazon-may-launch-smartphone-q4-2012-report-141341216.html

At $199, Amazon is selling the Kindle Fire slightly below the cost it takes to manufacture the tablet computer, according to market research firm IHS iSuppli.

In a “teardown” estimate published Friday, IHS iSuppli said it costs $201.70 to manufacture the Kindle Fire, which Amazon began shipping to customers this week.

“The Kindle Fire, at a retail price point of $199, is sold at a loss by Amazon, just as the basic Kindle is also sold at a loss at the current $79 retail price point,” IHS iSuppli’s Andrew Rassweiler said.

“Amazon makes its money not on Kindle hardware, but on the paid content and other products it plans to sell the consumer through the Kindle,” Rassweiler said.

He compared Amazon’s business model to that of wireless companies such as ATT or Verizon.

“They sell you a phone that costs them $400 to $600 or more to make for a price of only $200,” he said. “However, they expect to more than make up for that loss with a two-year service contract.”

The IHS iSuppli estimate only takes into account hardware costs and not software, licensing, royalties or other expenditures.

At $87, the most expensive component in the Kindle Fire is the touchscreen display which Amazon sources from LG Display and E Ink Holdings, according to IHS iSuppli.

Amazon refuses to give sales figures for the Kindle electronic book reader or the Kindle Fire but the company said this week that the Kindle Fire is the “best-selling” item on Amazon.com.

The Kindle Fire has a seven-inch (17.78-centimeter) screen, smaller than the iPad’s 9.7 inches (24.6 cm), connects to the Web using Wi-Fi and is powered by Google’s Android software.

It does not have a camera or the 3G connectivity featured on other tablets but it gives buyers easy access to Amazon’s online store, which sells books, music, movies, television shows, games and other content.

Article source: http://news.yahoo.com/amazon-sells-kindle-fire-below-cost-research-firm-181850123.html