The changing world of Warren Buffett 30 Apr 2009 As Berkshire Hathaway shareholders gather for this year s Woodstock for capitalists , the legendary investor wants them to ask more about the company s business than usual. They should do that and listen up. Through Buffett s choices and market forces, Berkshire is changing.
Chrysler may face a bankruptcy battle 30 Apr 2009 The US wants the car company to use an expedited process to get in and out of Chapter 11 quickly. The socalled section 363 approach sounds smart. But some of the company s creditors feel shortchanged and could wage a legal challenge. They have decent grounds to do so.
Ericsson’s optimism misplaced 30 Apr 2009 The Swedish telecoms equipment maker sounds more positive than its rivals. But there s little reason. Operating cash flow is negative and Sony Ericsson, its lossmaking mobile joint venture, needs cash. Investors are right to be spooked by Ericsson s willingness to stump up.
BNP gets Fortis – plus risk of government meddling 30 Apr 2009 After more than six months of legal skirmishes, BNP Paribas finally has the goahead to buy its troubled Belgian peer. The Belgian and French governments are each going to own a sizable chunk of BNP s shares. The French bank gains in size, but may lose some of its independence.
Independent M&A shops face overcrowding 30 Apr 2009 Boutiques have risen from the ashes of Wall Street giants, while established midsize firms are exploiting the bulgebracket backlash. Demand for independent advice may be rising. But results from Lazard and Evercore suggest it may still be too small to feed that many mouths.
Fiat goes all in with Chrysler 30 Apr 2009 The Italian car maker has pulled off a remarkable coup. In exchange for noncash bits and bobs, it has secured a path to control the US car company after its bankruptcy. But running a sprawling car maker is difficult just ask Renault s Carlos Ghosn.
Colgate outshines P&G in battling downturn 30 Apr 2009 Both consumergoods groups saw quarterly revenues fall. But because of a more discretionary product mix, P&G took a bigger beating. And as Colgate was more aggressive in trimming costs, it teased out a 9% rise in profit making it look more capable of weathering the recession.
Markets infected by confidence pandemic 30 Apr 2009 European stocks have erased this year s losses. US Treasury yields are above 3%. Killer flu? No worries. Negative growth? Not for long. A kind of flight from safety is underway. It shows the medicinal power of monetary and fiscal injections. But painful side effects will follow.
Yahoo needs more than reconstructive surgery 30 Apr 2009 New boss Carol Bartz is already making her mark on the struggling internet giant. She s cutting back and selling off dormant units and trimming workforce fat. But that alone won t be enough to turn Yahoo around. Change is good, but Bartz needs to give the company a mission.
Chrysler holdouts should keep fighting Obama’s cramdown 30 Apr 2009 It s politically expedient to blame recalcitrant hedge funds for forcing the carmaker into bankruptcy by not accepting 33 cents on the buck. But treading on their rights as secured creditors is bad for capitalism and may hamper Obama s exit strategy from Bailout America.
SocGen’s Bouton yields to scapegoat status 29 Apr 2009 The French bank s longstanding chairman has quit, citing personal attacks on him since last year s Kerviel trading scandal. He made a few mistakes recently. But he seems to have realised that his position was untenable amid pervasive Boutonbashing endorsed by President Sarkozy.
Big Spanish banks weathering the storm 29 Apr 2009 The domestic economy is in serious trouble and Latin America is weak. But relatively prudent lending and wide margins have kept Santander and BBVA well in the black without relying on trading profits. Conditions are getting tougher, but the Spanish still look relatively strong.
Forward start agreements ease credit woes 29 Apr 2009 ArcelorMittal, Telefonica and Reed Elsevier all recently extended loan maturities by paying lenders a higher fee and margin. This nifty way to bypass troubled syndicated loan markets and lockin future funding is taking off. But despite the fees, lenders share some pain.
Outcry at EU hedge fund rules is overdone 29 Apr 2009 Europe s proposals for regulating hedge funds and private equity firms sensibly focus on disclosure and give local regulators latitude in implementation. Plans for minimum capital requirements need more thought. But the blueprint is a reasonable starting point for debate.
Obama has what he needs to restructure Chrysler 29 Apr 2009 With banks holding 70% of Chrysler s secured debt agreeing to the Treasury s 30 cents on the dollar offer, the reorganisation can move ahead. Of course, with the other 40 lenders still willing to fight, it means Chrysler is hardpressed to avoid bankruptcy.
BofA boss Lewis rightly stripped of chairman’s title 29 Apr 2009 Despite the parochial hoopla of the bank s AGM in Charlotte, a resolution to separate the chairman and CEO roles received enough support for the board to act. But naming a lifelong academic to oversee the domineering Lewis looks like a fig leaf.
ArcelorMittal set to get mid-crisis $3bn 29 Apr 2009 Demand looks strong for the giant steelmaker s share and convertible bond offer. It needs the money after the first quarter left it burning cash. The steel industry is in bad shape, but investors trust the Mittals optimism, despite the family taking only 10% of the new shares.
Apple sets foxes loose in US smartphone henhouse 29 Apr 2009 The gadget maestro s success with the iPhone has Verizon, Microsoft and AT&T jockeying for a piece of the action. The outcome may be greater iPhone distribution, better terms for Apple or a new rival from a competitor with less of a track record. In any case, Apple probably wins.
US GDP is not as dismal as it looks 29 Apr 2009 Q1 consumption turned positive, inventories dropped and weak government spending which won t be a problem going forward depressed growth. Yes, capital investment plummeted, but the slowing decline suggests the economy is nearing a bottom. However it may stay there.
Epidemics aren’t profitable enough for drugmakers 29 Apr 2009 Roche s Tamiflu is the remedy of choice for swine flu. Yet the Swiss group s experience suggests the financial rewards for producing drugs to treat deadly diseases that can spread to epidemic proportions aren t sufficient to spur companies to develop new treatments.
BofA holders should withhold support for Ken Lewis 28 Apr 2009 The CEO s botched Merrill deal, which he s tried to pin on others, pummeled the firm s stock and prompted a double government bailout. And BofA may need more capital yet. The board has failed to act. Shareholders should take matters into their own hands at the AGM Wednesday.
BP and Shell can cope with $50 oil 28 Apr 2009 Neither company is comfortable with the current price. They think at least $60 a barrel is needed to keep up investments and maintain their dividends. But both can borrow more. BP looks like the safer shortterm bet. It is growing faster and spending less than Shell.
Italian bond scandal threatens to run and run 28 Apr 2009 Italy could be brewing its biggest scandal since Parmalat. Prosecutors have reportedly seized assets from investment banks accusing them of misselling derivatives to local government. With E35bn of derivatives sold to municipalities, it s a worry for the banks and the state too.
Asian economies’ flu defences already compromised 28 Apr 2009 SARS hit Asia hard in 2003, in part because there was no warning. But even with a headsup, Asian governments have less flexibility to respond now. Stimulus plans have stretched government budgets and the recession is hurting export revenues. Antiflu measures will slow recovery.
UK likely to copy US on too-big-to-fail tax 28 Apr 2009 Having decided not to forcibly break up the big boys, the government is instead likely to impose tougher capital ratios on Barclays, Lloyds, RBS and HSBC. The US is doing the same. Such a regime is a good idea. It might even encourage giants to break themselves up.
Nikko deal marks end of Japan’s Glass-Steagall 28 Apr 2009 Sumitomo Mitsui s purchase of Nikko Cordial, if it happens, will end Japan s separation of banking and brokerage, established in the 1940s. Since primary Japanese client relationships are with banks, it may be the key to creating Japanese houses that are fully competitive.
Tech bellwether profits predict distant recovery 28 Apr 2009 Earnings season for industry giants like IBM and Microsoft was mostly a story of unexciting results and tepid guidance. Tech outperformance usually presages recoveries. When the technology Pollyannas don t believe good times are just around the bend they probably aren t.
TCI retreat hands win to critics of activists 28 Apr 2009 The hedge fund fought hard and scrappily to get on the board of CSX, the US railway group. Now a weakened TCI has bailed. Such outcomes boost those who criticise activists as shortterm profitseekers. Unfortunately, they also risk silencing legitimate shareholder concerns.
KKR’s next move could be new riff on old theme 28 Apr 2009 The US buyout firm is frontrunner to buy OB, South Korea's number two brewer and cashcow in a duopolistic market. It's like the olden days: the buyer shouldn't have to do much more than leverage it up and watch it go. But look out for some modern problems: financing and price.
Germany should just answer the E800bn question 28 Apr 2009 A leaked memo over how many risky assets the country s banks are holding has created a heap of confusion. The financial regulator says the E816bn figure being reported distorts the truth. Instead of trying to root out the leak, efforts to clear the air would be more productive.