THE DISTILLERY: Woodside wary

Did you get up early and see the planets align this morning, just after 5am? Spooky but wonderful. I sense that some of the jotters feel dazed at the end of budget week, stunned by the jargon, the forecasts, forced to kill trees and consume Canberra's hot air emissions. A bit like smoking I think, Canberra in budget week can be hazardous to mental health. Some of our jotters must have glanced at the surprise fall in job numbers in April, fewer wrote about them, numbed it seems, by surpluses, 'forgotten people' and 'middle class welfare.' It can be hell in Canberra at this time of year, and cold as well.

Fairfax's Malcolm Maiden says yesterday's jobs surprise shouldn't be taken as a trend: "Underneath the soft one-month jobs numbers several facts remain, and one of them is that the job market is still as tight as a fish's sphincter at 50 fathoms: the number of jobs fell last month, but so did the participation rate, from 65.8 per cent to a still-high 65.6 per cent. There were slightly fewer people looking for work, in other words, and the unemployment rate was unchanged, at 4.9 per cent, down from 5.4 per cent in April last year. The job losses revealed in the April survey bear watching in coming months. If they continue, the pressure on the bank to raise rates will ease. However, so far it's volatility in the job numbers, not a new trend."

John Durie examined the new man at Woodside in his comment on The Australian's website yesterday: "Peter Coleman, the Woodside board's choice as new boss, appears on paper ideally suited to fix the sometimes poisonous relationships with joint-venture partners. The Australian-born former Exxon executive has the big-company experience that puts him in a good position to deal with the likes of Chevron and BHP Billiton, not to mention the slew of tough decisions ahead. He is a surprise choice and is not well known in the market, so commentary will have to await his performance."

But Fairfax's CBD fleshed out Coleman's CV this morning: "The statement included Coleman's CV, which noted his roles as a drilling engineer, the head of ExxonMobil in Indonesia, and the vice-president for the ExxonMobil Development Company in Texas. The CV did not include the role for which Coleman is probably best known for in Victoria. He was the operations manager responsible for the Esso natural gas plant at Longford in Victoria that suffered a major explosion in 1998, leading to a royal commission. The CV only refers to his ''various engineering and operating positions'' for Esso Australia between 1986 and 2001."

And The Australian's Matthew Stevens reported: "He is a St Kilda supporter, he was an Esso production manager at the Longford gas processing plant when it blew up in 1999 and subsequently spent much of a good four years in regular and routine dispute with Indonesia's government over what oil and gas territories ExxonMobil did and did not own. Evidently Woodside's next boss, Peter Coleman, is well practised in the elusive arts of crisis management. Which might well be just one of several reasons why this erstwhile Exxon lifer got the nod to replace Nebraska's own Don Voelte."

The Australian Financial Review said: "Peter Coleman, Woodside's newly appointed chief executive, expects his track record in dealing with difficult projects to help drive progress on stalled ventures." And the paper also reported: "The experience of Woodside Petroleum's new 'no-nonsense' chief executive Peter Coleman is valuable as the company tries to close a deal with Exxon/BHP."

The Australian's Bryan Frith wrote this morning that: "ASIC's approval for Thailand's Minor International to acquire 34.4 per cent of Oaks Resorts & Hotels should tell Retail Food Group (RFG) that it simply made its higher takeover offer too late. RFG responded by saying it was considering its bid position and would inform the market once it had made a decision. But there's nothing it can do. ASIC's decision means Minor now has a relevant interest in 54.3 per cent of Oaks, giving it majority ownership and outright control. Minor has since declared its offer unconditional, so must pay for all acceptances. RFG is left with no alternative but to retire from the contest."

Some rare good news for a struggling company says Fairfax Insider, Ian McIlwraith: "Downer EDI held its investor day yesterday, with encouraging news from its infamous lead weight on performance, the Waratah train contract. It is too early to say the $1.6 billion building of 78 train sets for RailCorp in NSW is, ahem, back on track but Downer's man trying to make the trains run out on time, Ross Spicer, seems to have a much better plan of attack than the embarrassing one with which the company began."

Pssst, want to know why power charges are higher than they should be? Read this good column from Brian Robins in the Sydney Morning Herald this morning: "The names South Australia and NSW are rarely uttered in the same breath. Both share the honours as the biggest wine producers in the country, but that is about it - apart from their also being notorious for having the highest wholesale electricity prices in the country, with power users squeezed as a result. According to the annual ''state of the energy market'' compiled by the Australian Energy Regulator, the wholesale electricity price in South Australia averaged $82 a megawatt hour in 2009-10, up 20 per cent. In NSW it rose 23 per cent to $52. This compares with about $40 in Victoria and Queensland."

Floats anyone? The AFR reports this morning that a trio companies are looking to list: "Underground mining contractor Barminco, temporary accommodation builder Ausco Modular and storage container stockist Royal Wolf Australia are looking to list." They or their sponsors are bold, given the lacklustre nature of the markets this year.

Fairfax's Adele Ferguson wrote on smh.com.au yesterday: "The latest on-again, off-again industrial action threatened by unions at Qantas will leave the airline's brand battered even if every flight ends up taking off as scheduled this week and next. The licensed aircraft engineers union today called off plans to strike tomorrow, prompting Qantas to reinstate flights it had planned to cancel during peak travel times. Some 2,500 passengers on 31 cancelled flights are presumably being contacted a second time today to be told to turn up at airports as initially intended. At this stage, the engineers are sticking to their plans to stop work or limit operations next Monday and Tuesday, so the reprieve may be short-lived. Either way, Alan Joyce's decision to stare down the demands of unions and staff in the face of industrial action threatens to cost the company dearly at a time when its rival Virgin Australia is ramping up its business offering after one of the most highly regarded executives at Qantas, John Borghetti, was appointed last year to run the group."

BlueScope Steel has joined rival OneSteel in the earnings downgrade stakes. The Australian's Tim Boreham had a look in his daylight comment yesterday: "Normally when a company takes analysts on a site visit, management has a rosy yarn to tell about operating conditions. But when BlueScope took brokers on a two-day whirl of its Port Kembla site last week, they responded by slashing earnings expectations. The pre-emptive round of downgrades means the steel maker's official market update this morning wasn't a surprise. Reflecting this, BlueScope shares gained modestly in an abysmal broader market. Having guided to a break-even second half on February 21, BlueScope now expects a "small reported net loss after tax''. This excludes net realisable value adjustments." And the AFR reported: "BlueScope shareholders braced for the worst after OneSteel's downgrade, so investors piled in when BlueScope flagged a small net loss."

Business Spectator's Stephen Bartholomeusz liked the Optus third quarter update yesterday: "With a little bit of help from one of its peers, Optus is continuing to ride the momentum created by the first mover advantage it grabbed in smart phones, and the massive and continuing investment it has made in upgrading its network to handle the explosion in the volumes of traffic associated with them. Optus chief Paul O'Sullivan will be particularly pleased that his final quarter earnings were up 19 per cent and that the mobile division was able to generate solid revenue growth on stable margins in the face of the massive assault by Telstra on the sector. Both Optus and Telstra are being helped by the implosion that occurred within Vodafone as a result of its network degradation issues, which is not just diverting customers to them but allowing them to acquire those customers without having to sacrifice margins." And Fairfax's Malcolm Maiden said this morning: "Optus still stayed ahead of mobile industry revenue growth in the latest year to March as Vodafone lost customers. Industry-wide mobile revenue grew about 7 to 7.5 per cent, and Optus increased its mobile revenue by 8.4 per cent. However, the low single-digit revenue and profit growth prediction is an acknowledgement that Telstra is a revitalised competitor."

The Australian's Nabila Ahmed reported this morning: "After an auction dogged by delays, the Victorian Minister for Racing, Denis Napthine, seems to be hinting at an early finish in the race for the state's 12-year wagering licence. Speaking at the Warrnambool Racing Carnival last week, the minister suggested the auction would be wrapped up in the next four to six weeks. The expectation before that had been a decision at the end of June. Tabcorp, which analysts and industry sources reckon has bid about $500 million for the licence, is expected to beat rival Tatts Group to the asset."

She also reported that: "A capital raising of about $400m might not have been ticked off yet, but Gloucester Coal's advisers were out yesterday hosting site visits at the target company Donaldson Coal's mining operations south of Maitland in the Newcastle coalfields. The capital raising, widely expected to be launched yesterday, may still be a day or two away. Gloucester chairman James MacKenzie and his fellow independent committee members Denis Gately and Greg Fletcher continued to tussle with the company's advisers last night over exactly how discounted its capital raising to acquire Donaldson and Monash would have to be."

The Australian's John Durie wrote this morning: "The top brass at ASIC spent yesterday in a strategy meeting as the watchdog prepares for life under new boss Greg Medcraft after Tony D'Aloisio finishes up today. No one can expect to be the corporate plod and win a popularity contest -- about the best you can do is win grudging respect and your own satisfaction. A B-minus grade from one of Australia's top investment bankers, then, is high praise. D'Aloisio came to the job with stockbrokers already against him from his days running the ASX, when he lifted fees at the expense of investment banking bonuses."

A lot of publicity about the Galleon insider trading conviction in New York yesterday, but will it do anything to change it? US writer and accounting professor, Frank Partnoy says nope, as he wrote in the Financial Times: "But over the slightly longer term, smart traders will examine the facts used against Rajaratnam, calculate the probability of getting caught and conclude that now is the time for an insider-trading feast. If you do the maths, given the amount of insider trading, the chances of doing prison time are roughly the same as getting bitten by a great white shark while surfing off the coast of my home town, San Diego. Of course, plenty of people will obey the law because it is the right thing to do, even if they would be better off transgressing. But Wall Street is known for applying probabilities to its risks, including the risk of liability. Bankers advocate aggressive tax structures and liberally interpret accounting rules. Insider trading is no different. Moreover, and this is the second, deeper problem for regulators, it isn't clear from this case what insider trading even is. Many business people do not understand why Rajaratnam committed crimes related to Intel's acquisition, yet it was apparently legal for David Sokol to buy Lubrizol shares just before it was acquired by his company, Berkshire Hathaway. There is no clear dividing line." Parnoy is professor of law at the University of San Diego and the author of the best book on the recent history of Wall Street called F.I.A.S.C.O. - Blood In The Water, about his times at Morgan Stanley and CS First Boston. Worth a read.