Control freak bosses finally get buyout benchmark 30 Jul 2010 Car parts maker Magna is paying its chairman, Frank Stronach, $1 bln to relinquish voting control, setting a bar for the likes of the Redstones, Fords and Murdochs. Breakingviews imagines an advisor counseling supervoting shareholders on how much their votes could be worth.
U.S. GDP data show recovery lacks bounce 30 Jul 2010 The U.S. economy grew at a 2.4 percent rate in the second quarter. But inventory buildup, government spending and a taxdriven housing blip produced most of that, suggesting sluggishness elsewhere. Even with no doubledip, growth is too slow to help the unemployed much.
Li Ka-shing’s $9 bln cheque should make EDF wonder 30 Jul 2010 The tycoon has massively outbid rivals to snare the French energy giant's UK distribution assets. It seems like a win for EDF's new CEO Henri Proglio, who gets a warchest to invest in nuclear. But is EDF, which had been divided about the sale, missing the potential of grids?
Refining shines for Big Oil but maybe not for long 30 Jul 2010 A hattrick of betterthanexpected results from U.S. energy supermajors owed much to a pickup in their longsuffering refineries. But with the economy still fragile this may be a danger zone for years to come. That should favor refining lightweight Chevron over rival Conoco.
India’s peripatetic middle powers MakeMyTrip IPO 30 Jul 2010 The online travel agent downsized the deal, the first IPO for an Indian firm in the U.S. since 2006. But it has half India s web travelagency bookings, and is growing much faster than the market. Add changes to boost profits and MakeMyTrip shouldn t struggle to get its $70 mln.
Lehman brings Nomura little joy in tough quarter 30 Jul 2010 The Japanese bank was barely profitable in the second calendar quarter. The domestic retail business fared well. But the former Lehman operations coped poorly with difficult markets, with revenues falling and costs staying high. Investment banking glory continues to elude Nomura.
Shell’s tortoise overtaking BP’s hare 29 Jul 2010 The AngloDutch oil major's eternal rival, BP, is now shrinking after the Gulf of Mexico disaster and a previous acquisition splurge. Meanwhile, Shell is going in the opposite direction. Production is growing again and the best is yet to come.
Telcos stronger financially than strategically 29 Jul 2010 Operators are showing improving trends with Telefonica, France Telecom and BT all beating expectations. The sector is showing welcome discipline, with an increasing number of telcos making threeyear dividend commitments. But strategic uncertainties will continue to weigh.
U.S. should consider prizes to boost innovation 29 Jul 2010 Privately funded examples launched space tourism and helped Netflix better predict customers' DVD preferences. Awards might improve oil spill cleanup, too. In an age of austerity, prizes could be an efficient way for government to fund breakthroughs that help the economy.
Big is beautiful in hedge fund land, for now 29 Jul 2010 More than ever, sovereign wealth funds and institutions are entrusting their money disproportionately to the largest funds. It shows how hedge fund investors are changing, and how risk averse they are at least for the moment. They may find out bigger isn't always better.
Strong trade growth belies double dip talk 29 Jul 2010 The fear of a double dip in the global economy looks overdone. Global trade is probably back to its precrisis peak. China has kept motoring. German growth is rallying. America is picking up gradually. The world's problems are many but global recovery appears on track.
Schwarzenegger takes out big guns in fiscal crisis 29 Jul 2010 The California governor has declared a financial state of emergency and put government worker furloughs in his crosshairs. That should usefully focus the minds of lawmakers still twiddling thumbs while the Golden State approaches a Greeklike tragedy.
UK retirement reform risks charter for geriatrics 29 Jul 2010 A government proposal to scrap automatic retirement at 65 is welcome. But giving the same employment rights to older employees who will accrue more of them while their contribution inevitably dwindles makes no sense.
Exxon has suffered too much for flawed XTO deal 29 Jul 2010 Investors have wiped over $40 bln off the value of the Texas energy giant since its splurge on gas producer XTO precisely the firm's price tag. With Congress ditching climate change rules, cleanburning gas looks like a bad bet. Yet to assume that XTO has zero value is barmy.
Thanks for the profits. Now where’s the growth? 29 Jul 2010 Across the corporate spectrum, from defence and drugs to publishing and packaging, the results message is the same: we've successfully navigated choppy waters, even if we can't see far ahead. But the markets want growth, and see limits to rising earnings from stagnant sales.
Russian Internet octopus poses IPO quandary 29 Jul 2010 Digital Sky Technologies, best known for taking stakes in Facebook and hot games company Zynga, may go public in 2011. But DST's tangled web of similar firms with the odd crossholding in some ways echoes the Japanese keiretsu. It may not be easy to define or value.
Derivatives market blind to sovereign seniority 28 Jul 2010 Sovereigns like to think they're different. But the credit crisis is making banks treat them like any other counterparty when it comes to trading in derivatives. Just look at Portugal.
Slow recovery will test ArcelorMittal targets 28 Jul 2010 An economic slowdown in China and slowerthanexpected global steel restocking cycle will translate into a gloomy second half for the steelmaker and economic bellwether. ArcelorMittal's previous forecast of 10 pct growth in world steel demand in 2010 may now be a close call.
Stress tests help reduce market tension 28 Jul 2010 It's more or less all right again in financeworld. Investors grumble, but they have been comforted by the EU's examination. Antibank sentiment is cooling and corporate profits look pretty good. But the economic recovery is still hesitant, and someday the stimulus must end.
Mega-jubilee may be least bad answer to debt mess 28 Jul 2010 Some want fiscal austerity, others more stimulus, but neither would really solve the basic global financial problem of too much leverage. It's time for a reset. Forgive debts and write down corresponding assets, says Edward Hadas in his valedictory column for Breakingviews.
Conoco doesn’t yet deserve to be valued like Exxon 28 Jul 2010 Investors have largely closed the valuation gap since ConocoPhillips repented its spendthrift ways and started paying down its debt. Still, it's hard to see why Conoco is already rated almost in line with the bestinclass Exxon Mobil. It still has plenty to prove.
Reputational ruin best way to concentrate minds 28 Jul 2010 The former finance director of Northern Rock, the failed UK mortgage bank, has been fined and barred by the FSA. Quite right. The figures that were published before the collapse were wrong. That destroys the rock on which analysis, creditworthiness and comparisons are built.
China on course for a Minamata moment 28 Jul 2010 Mercury poisoning in the Japanese town eventually made fighting pollution into a national priority. In China, pollution is still mostly considered an acceptable cost of growth, so its big oil spill has created less of a hubbub. But the tipping point will come.
Disney deal kicks hardcore gamers where it hurts 28 Jul 2010 The media giant s $763 mln purchase of Playdom looks like the biggest financial signal yet that the future of the gaming industry lies with socially networked play and not with geeks stuck to consoles. That s bad news for the likes of Electronic Arts.
Vivo battle ends with both sides bruised but happy 28 Jul 2010 Portugal Telecom has surrendered to Telefónica in the battle over their Brazilian mobile JV, after the Spanish telco upped its offer to 7.5 bln euros. Telefónica gets its way while PT is well paid for making a strategic retreat. The clear winners are PT's shareholders.
U.S. death tax anomaly tests billionaire longevity 27 Jul 2010 New York Yankees owner George Steinbrenner recently died. There's no suggestion of foul play. But with U.S. estate tax currently zero reverting to 55 pct in 2011, timing matters financially for a billionaire's heirs. The statistics are worth watching for unlikely blips.
Further U.S. house price fall may set banks back 27 Jul 2010 The 4.6 pct yearly rise in May's CaseShiller house price index was driven by the Federal homebuyer subsidy. Still up 47.3 pct from 2000, prices look set for a further drop, as jobs are scarce and confidence falling. That will test the limits of last year's bank stress tests.
Obama’s sinking polls could force change of plans 27 Jul 2010 The U.S. president's recovery summer has become more of a swoon. GDP growth has downshifted, as have Obama's poll numbers. With Democrats likely to suffer big losses in November's elections, the president will have to rethink his economic agenda to avoid gridlock in 2011.
Demise of cap-and-trade beckons new solutions 27 Jul 2010 A new Senate bill may signal the U.S. is finally ditching plans to limit carbon emissions. It's a failure that has many fathers including the White House, Congress and green groups. But the collapse of capandtrade could birth more politically realistic solutions.
BP tries slimming back to health 27 Jul 2010 The UK oil major is upping its disposal programme to $30 bln and cutting debt after taking a $32 bln hit on the Gulf spill and changing CEO. Like a wounded bank, BP is kitchen sinking and wants maximum financial strength. But there's still much risk and uncertainty to the plan.