[February 05, 2006]

Kingfisher's wings clipped

(Daily Mail Via Thomson Dialog NewsEdge)WHEN a major Footsie company's own stockbroker takes a chainsaw to its profit forecasts ahead of a trading statement, it is bound to cause a stir.

That is exactly what happened to Kingfisher, which nosedived 9p to 230p on a hefty turnover of 39m following a swingeing downgrade by Credit Suisse.

An update on its performance during the crucial fourth quarter is due on February 16.

CS's retailing guru Tony Shiret slashed his 2006/07 pretax profit estimate by 12pc to GBP410m and the following year's by 11pc to GBP475m because he feels that recovery is unlikely to start until well into 2006/07.

His downgrade reflects the effects of modest negative like-forlike sales at its struggling DIY business B&Q, flat gross profit margins and rising costs.

Shiret is adamant that Kingfisher will not be taken over by either venture capitalists or a US buyer.

American DIY giant Home Depot was always the name in the frame until it recently forked out almost GBP2bn on Hughes Supply, one of America's largest distributors of construction and maintenance.

Legendary US investor Warren Buffett had fanned the takeover flames by acquiring small shareholdings in both Kingfisher and Home Depot last year.

There was a late flurry of speculative buying of Marks & Spencer, which left the revitalised retailer 123/4p higher at 499p.

It touched 5021/2p at one stage on an off-the-wall jackanory that chief executive Stuart Rose is about to team up with Kohlberg Kravis Roberts, the US private equity giant, to launch a takeover bid for the company.

Fears of yet higher US interest rates dragged Wall Street 66 points down initially. That left the Footsie 19 points off before a late rally left the close 12 points better at 5759.3.

Dearer money worries increased after the US unemployment rate fell to a five-year low of 4.7pc in January.

Persisting break-up bid speculation lifted leisure group Whitbread to 1120p before it ended 10p up at 10881/2p.

Hopes that Rolls-Royce will replicate its excellent interim performance when it reports profits for the full-year on Thursday helped the shares soar 143/4p to 4443/4p.

Barclays stockbrokers' forecast pretax profits of GBP565m, up from GBP364m.

Growth is underpinned by growing civil-aviation deliveries and by growth in its aftermarket activities.

Hyperactive buyers chased Shire Pharmaceuticals 19p higher to 924p after the company said it had filed SPD476, an experimental treatment for ulcerative colitis, for potential approval by Europan regulators.

Profit-taking after Thursday's spurt on Russian takeover speculation left British Gas owner Centrica 63/4p lower at 2931/4p.

The group touched 337p amid intense speculation that Russian state gas group Gazprom might launch a bid.

Citigroup advised clients to buy because other interested parties may be flushed out even if Gazprom does not bid. Should Gazprom decide to make a move, it is unlikely it would receive UK regulatory approval.

Rupert Murdoch's BSkyB firmed 81/2p to 505p. Value investor Brandes Investment Partners has acquired a 3.1pc stake via a mixture of ordinary shares and American depositary receipts. Franklin Resources has increased its stake to 10.1pc from 9pc.

GTL Resources, which is building an ethanol plant in Illinois, added 0.37p to 2.43p on turnover of 48m.

Still reeling from Monday's shock profit warning which saw its valuation collapse 45pc, iSoft fell 101/4p further to 181p. The health software firm said it expects a GBP55m shortfall in full-year revenues after delays to the NHS's computer upgrade.

AIM-listed e-retail, the online retail consultant, jumped 21/2p to 51/2p following its reverse takeover of online specialist music and fashion retailer EBTM (Everything But The Music) for GBP1.5m.

US institutional buying following a recent upbeat roadshow lifted Ceres Power 15p to 240p.

Funeral parlour group Dignity gained 153/4p to 4791/4p after revealing plans to return GBP80m, or GBP1 a share, to shareholders.

TAKING advantage of a technical situation in the market, directors of interactive digital broadcaster Cellcast bought stock and the close was 31/2p higher at 69p. Chief executive Andrew Wilson acquired 22,500 at 661/2p as did chief operating officer Bertrand Folliet, while finance director Emmanuelle Guicharnaud bought 7,500. Prospects must be bright for the company that sells platforms to TV companies.

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