NZ Stocks: Shares trade flat, dodging US fallout

12.00 pm

The New Zealand sharemarket was flat this morning, dodging much of the fallout from a raft of profit warnings in the US on Friday night.

By just after 11am the benchmark NZSE-40 index was up 1.91 points at 2054.61, on turnover worth $20 million.

"The markets offshore have been pretty weak so our market being where it is today is not a bad performance," Credit Suisse First Boston dealer David Price said.

In the United States the Nasdaq market registered its biggest weekly loss this year on Friday following a steady stream of grim profit forecasts from high-technology companies.

Telecommunications equipment maker Nortel Networks Corp and JDS Uniphase Corp, a fibre-optics parts supplier, both warned of disappointing results amid the slowing US economy.

The tech-laced Nasdaq Composite Index slipped 15.64 points, or 0.77 percent, to 2028.43.

So far this quarter, 498 US-based companies have said their earnings would fall short of expectations - a five-fold increase from a year ago.

Even blue-chip companies like fast-food chain McDonald's Corp on Friday joined a chorus of warnings, putting a dampener on the Dow Jones industrial average which ended down 66.49 points, or 0.62 percent, at 10,623.64.

Action on the local front this morning was quiet, with falls outnumbering rises by 38 to 24 among the 112 stocks traded.

Natural Gas Corporation was down 4c at 93c by just after 11am, having earlier hit an all-time low of 90c, after announcing on Friday it would raise prices for small business and residential customers because of high wholesale market prices.

The company's share price has lost around 24 per cent since it warned on June 8 it was unlikely to show a profit in the current half-year period.

Debt collection specialist Baycorp Holdings was steady at 1220 after announcing it was investigating closer ties with listed Australian company Data Advantage "which could include a possible merger".

The move had been foreshadowed in the market for some time, Mr Price said.

"That comes as no surprise to the market. People have talked about it on and off for some time," he said.

Chairwoman Rosanne Meo said the nature and structural form of any possible ties or merger had yet to be determined and that if, or when, any agreement was reached, a full announcement would be made to the market.

Baycorp, with a market capitalisation of just over $1 billion, has 9.9 per cent of Data Advantage which is capitalised at $A675 billion ($NZ863 billion).

Air New Zealand A and B shares were both higher, up 3c at 118 and 7c at 154 respectively, as the national carrier's board today began a series of marathon meetings to "get an early resolution" to its future ownership.

A report by investment bankers Salomon Smith Barney, canvassing the options, will be presented as directors gather at the company's Auckland headquarters for the start of the two-day board meeting.

The options to be considered include Singapore Airlines increasing its stake in Air NZ to 35 per cent and taking an 80 per cent slice of Ansett Australia, recapitalising Air NZ based on its present structure, or the proposed Qantas Airways bid.

Shares in Montana were unchanged at 480 after British liquor group Allied Domecq said it planned to quickly "expose its processes" to counter allegations by rival Lion Nathan that it, too, is in default of the takeover rules in the battle for control of the winemaker.

Allied Domecq says it will not indulge in the "delaying tactics" Lion Nathan and its broker Credit Suisse First Boston employed when asked to answer allegations of share trading in violation of a takeover pause period.

Lion Nathan has alleged that Allied Domecq breached takeover rules when it bought shares from Montana chairman Peter Masfen last month, enabling the British company to boost its stake to 26 per cent.

Lion shares were up 5c at 515 by mid-morning.

Electronics manufacturer PDL Holdings was steady at 1000 after it today issued a don't sell notice "pending the making of an important announcement".

The announcement will be made before the close of trading today.

In other movements, Fisher & Paykel shed 15c to 1120, AMP lost 14c to 2638, Brierley was up 4c at 66c, Richmond was down 3c at 247, Sky City was up 20c at 1075, Telecom was up 3c at 558 and WestpacTrust fell 35c to 1595.

- NZPA