RIO - Rio Tinto

[white_crane]

Anyone else think that RIO is about to go up (even if only for a short time)?

It closed higher than the open on good volume.

 

[banska bystrica]

I took a RIO $40 call option with a 29/1 expiry at a tick over $2 on Friday for a pork chop. BHP and RIO should have a Christmas/New Year rally.

 

[|rockefeller|]

Although Rio's share price is almost the same as BHP, I personally think you cant go wrong this company long term.

 

[Glen48]

In the Gladstone papers there is a story about RIO closing up shop due to the price of Al. I am backing them down due to the debt....yet BHP is going down as well and they are suppose to be cashed up????

 

[cutz]

I took a RIO $40 call option with a 29/1 expiry at a tick over $2 on Friday for a pork chop. BHP and RIO should have a Christmas/New Year rally.

On the topic of RIO options, those Jan 25 puts are also looking pretty tasty
On the short side of course.

 

[noirua]

On the topic of RIO options, those Jan 25 puts are also looking pretty tasty
On the short side of course.

Rio Tinto still have to explain what is going to happen with their US coal holdings, once valued at US$11 billion. These were due to be sold to play down debt.

 

[mfp]

Anyone else think that RIO is about to go up (even if only for a short time)?

It closed higher than the open on good volume.

I bought 1800 units @ $30 Friday. You may have noticed it initially rebounded to $30.80, then retested $30 before hitting $33.39 and closing at $32 on good volume. That's pretty convincing price action, for at least a short run anyway (and possibly a lot more), and considering the reversal on the DOW from -260 to +260 on catastrophic employment numbers, things are looking good for Monday and maybe for the week. RIO was also up 7% in the US.

 

[Sean K]

I bought 1800 units @ $30 Friday. You may have noticed it initially rebounded to $30.80, then retested $30 before hitting $33.39 and closing at $32 on good volume. That's pretty convincing price action, for at least a short run anyway (and possibly a lot more), and considering the reversal on the DOW from -260 to +260 on catastrophic employment numbers, things are looking good for Monday and maybe for the week. RIO was also up 7% in the US.

Nice work.

Does seem a little oversold on long term chart.

Looks pretty crap fundamentally but the market might have overshot for now.

 

[Hank Moody]

I bought 1800 units @ $30 Friday. You may have noticed it initially rebounded to $30.80, then retested $30 before hitting $33.39 and closing at $32 on good volume. That's pretty convincing price action, for at least a short run anyway (and possibly a lot more), and considering the reversal on the DOW from -260 to +260 on catastrophic employment numbers, things are looking good for Monday and maybe for the week. RIO was also up 7% in the US.

I bought 320 units at $31, hoping to sell at $36, i dont think they are going to bounce back for too long

I cant imagine them staying that high for long though

 

[Naked shorts]

I cant imagine them staying that high for long though

............and what makes you think that?

Saying that doesnt provide anyone with any useful information.

 

[radar23]

http://www.theaustralian.news.com.au/business/story/0,28124,24780826-643,00.html

Rio to axe 14000 jobs world wide.

The key decisions are:
• Reduction in controllable operating costs by at least $2.5 billion per annum in 2010;
• Reduction in global headcount of 14,000 roles (8,500 contractor and 5,500 employee roles);
• Consolidation of offices around the Group, including in London;
• Rapid acceleration of outsourcing and offshoring of IS&T and procurement;
• Capital expenditure to be reduced to $4 billion in 2009 and towards sustaining capex levels in 2010, unless market conditions improve;
• An expanded scope of assets targeted for divestment, including significant assets not previously highlighted for sale.


Maybe they are worth a buy now with all this cost cutting. I personally am concerned for all the redundancies.

thanks

 

[Aussiejeff]

------------------

**LATE NEWS FLASH**

After market close today, RIO announces it is going to slash 14,000 jobs (8,500 contractor and 5,500 employee roles) and a swag of projects in an attempt to cut $10Billion of debt by end of 2009.

Dividend to be held at 2007 level of 136 cents with no prospect of growth in 2009.

-------------------

RIO went up nicely today before that bombshell.

Any ideas where to now? Any thoughts on how this mass un-employment for at least 12-18 months might primarily affect WA economy and WA mining towns (as well as others)?

Doesn't sound good to me. But what would I know? SP might BOOM as a result


(I don't hold)

aj

 

[waz]

Have a look at the 5 page pdf they have put out.

On the last slide there is a nifty table showing how a 10%+/- price change will change its underlying earnings for 2008.

If anyone can decode this, let us know if you think it makes sense. Its funny how it doesnt say if the impact is negative or positive.
The other factor besides price is the volume.

The table doesn't make sense. I think someone has copied and pasted out of Excel incorrectly in a rush to get it out before London opening.

Am I right in assuming the 201.69c/dmtu price for iron ore is US dollars?

 

[white_crane]

I think it will be seen favourably.
Debt reduction and the fact that the dividend will be at least the same as last year, in spite of all the gloom, are positive news I think.

Find out tomorrow.

 

[michael_selway]

I think it will be seen favourably.
Debt reduction and the fact that the dividend will be at least the same as last year, in spite of all the gloom, are positive news I think.

Find out tomorrow.

Yeah I agree, and sounds liek a good business plan put into action, esp in these tough times

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 653.9 1,284.6 988.4 1,053.2
DPS 154.3 198.7 283.1 288.0

Date: 9/12/2008
Author: Joel Gibson
Source: The Sydney Morning Herald --- Page: Online
The Australian Government's native title working group has recommended thatmining companies be provided with tax incentives for investing in indigenouscommunities. Tax breaks would also be available for investing in infrastructurein remote parts of the country, as well as venture capital firms which providefinancial support for indigenous business enterprises

thx

MS

 

[Garpal Gumnut]

Yeah I agree, and sounds liek a good business plan put into action, esp in these tough times

Earnings and Dividends Forecast (cents per share)
2007 2008 2009 2010
EPS 653.9 1,284.6 988.4 1,053.2
DPS 154.3 198.7 283.1 288.0

thx

MS

The chart still looks pretty crap though.

Layoffs and native title lipservice are small bikkies.

the Chinese are the main game, apart from the lousy chart of course.

gg

 

[Miner]

Another knee jerk reaction.
It is the contractors who do the work for Rio
Many ex employees became contractors in Rio to earn more money of course but to deliver.

That is why many white elephant managers, top heavy non performers still winding with bull strategies etc.

So those non performers will deliver now !!!!

Well let us see what comes out even with some good rise today in RIO

PS I do not hold

 

[noirua]

Rio Tinto trade up 16.5% in London today.

Mining giant Rio Tinto is to axe 14,000 jobs in an attempt to slash operating costs and debt.

The company, which has iron ore operations in Australia is to cut spending on projects from US$9 billion to US$4 billion next year.

Rio blames sharp falls in commodity prices due to the global economic slowdown. It aims to slash US$10 billion from its US$38.9 billion debts by the end of 2009.

Rio said contractors will make up 8,500 of the 14,000 jobs due to be cut but did not provide details on locations for the redundancies.

The group became the world's biggest aluminium producer following the acquisition of Alcan last year.

Rio Tinto's Chief Executive Tom Albanese said the company's focus in the current climate is on maximizing cash generation and paying down debt.

Rio said it plans to hold its 2008 dividend at last year's level, while it will also consider the sale of assets not previously targeted for divestment.

 

[Aussiejeff]

Rio Tinto trade up 16.5% in London today.

Mining giant Rio Tinto is to axe 14,000 jobs in an attempt to slash operating costs and debt.

The company, which has iron ore operations in Australia is to cut spending on projects from US$9 billion to US$4 billion next year.

Rio blames sharp falls in commodity prices due to the global economic slowdown. It aims to slash US$10 billion from its US$38.9 billion debts by the end of 2009.

Rio said contractors will make up 8,500 of the 14,000 jobs due to be cut but did not provide details on locations for the redundancies.

The group became the world's biggest aluminium producer following the acquisition of Alcan last year.

Rio Tinto's Chief Executive Tom Albanese said the company's focus in the current climate is on maximizing cash generation and paying down debt.

Rio said it plans to hold its 2008 dividend at last year's level, while it will also consider the sale of assets not previously targeted for divestment.

At first glance, the announcement has seen a very positive response overnight with a 20%+ surge in RIO's SP on international markets (GOOD for the relative few who hold RIO shares). Unfortunately, there will undoubtedly be some "hidden" and very serious collateral damage done to various economies as a result of RIO's announcement (BAD for everyone affected).

This is because there are an awful lot of small, medium & even large service, ancilliary and component supplier companies associated with RIO's current level of operations (even small town and settlement's economies) that are going to suffer extremely badly or in many cases go under, as a result of these mass layoffs and sharp cutbacks in Rio's production & development over an extended period. RIO is only looking as far forward as end 2009. If China wallows into 2010-2011 the ramifications are going to be far worse.

So the 14,000 job cuts for workers directly associated with RIO may actually cause a knock-on unemployment number at least twice that, throughout affected local economies as other associated businesses (pubs, clubs, delis, grocers - you name it) are also forced to tighten up or fold. I can understand why RIO shareholders might be smiling today (I'm not a holder) but I'm cringing at that likely knock-on effect to many economies and the insidious prospect of far greater unemployment in affected areas than the immediate 14,000 that Rio quotes.

There's 2 sides to every story....

So I'll wish Good Xmas Luck to RIO share holders today.


aj

 

[Sean K]

At first glance, the announcement has seen a very positive response overnight with a 20%+ surge in Rio's SP on international markets
aj

aj, might depend to some degree where these jobs are being lost. 14,000 people in Africa or South America, then it's a drop in the bucket. 14K from central Perth a bigger drop in a smaller bucket. And remember, those bodies are probably on contracts extending out some time so will still have some cash flowing, and time to move back to Melbs and their taxi or garbage run. I'm probably underestimating the effect of course.