Renegotiating EU bailout can’t mask Irish pain 28 Feb 2011 Irish voters have given its new government a mandate to seek cheaper European loans and burn bank bondholders. Neither move would do much to dent Ireland's debt burden, or make its fiscal cuts less severe. Still, sharing the pain may help make austerity more palatable.
U.S. property hotspot revealed by $17 bln of deals 28 Feb 2011 Giant wagers in commercial real estate, exemplified by the Blackstone and Ventas transactions unveiled on Monday, might appear risky. After all REITs, one gauge of the sector, are trading at premium valuations. But a recovering economy and tight supply make it a sound bet.
Europe’s first big IPO of 2011 needs the hard sell 28 Feb 2011 ISS is looking to deleverage via a $2.4 bln float. The Danish outsourcing giant isn't the hottest growth story. Recent results are a mishmash of restructuring and bolton deals. But discount pricing plus bid speculation could help ISS relaunch Europe's IPO market with a bang.
HSBC’s lower returns don’t mean low potential 28 Feb 2011 The lender has followed rivals in cutting its return on equity target to 1215 percent. Investors may not like it, but it's a realistic response to greater regulation and low interest rates. Longer term, HSBC's liquidity and emerging market focus positions it better than most.
U.S. incorporation shopper given slap it deserved 28 Feb 2011 Colognereeking U.S. retailer Abercrombie called off a vote on reincorporating in shareholder lessfriendly Ohio after investors balked. Arbitraging incorporation happens infrequently because it doesn't deliver benefits to owners. This should keep the practice rarer still.
U.S. needs to keep in competitive shape 28 Feb 2011 America's best days may lie ahead, as Warren Buffett says. But past results don't guarantee future success and plenty of folks, especially corporate bosses, worry the U.S. is becoming a less attractive place for multinationals to do business. Washington can help prove them wrong.
Independent analysts spread their wings 28 Feb 2011 Eight years after Eliot Spitzer cut off analysts from investment bankers, independent research houses are taking off. Low overheads and supportive regulation helps these boutiques earn a good living. But they can't get too big without endangering their raison d'etre.
Economic sanctions irrelevant to Libya’s plight 28 Feb 2011 Imposing travel bans and asset freezes on Muammar Gaddafi and his inner circle, as well as an arms embargo on the country, is better than nothing. But at this stage of violent unrest, economic sanctions won't do much to end civilian bloodshed or help topple Gaddafi.
Buffett has it both ways with Goldman Sachs 28 Feb 2011 In his annual letter the Sage of Omaha once again rails against Wall Street evils like hedge fund compensation, leverage and optionvalue pricing. Yet he also blesses the Fed for giving Berkshire more time with its investment in Goldman. It's hard not to see a contradiction.
Copper fight highlights merger of equals flaw 28 Feb 2011 Lundin and Inmet wanted a quiet, nopremium marriage. Now a third copper miner, Equinox Minerals, has thrown in a $5 bln hostile bid for Lundin at a 26 pct premium. One message is that mergers of equals are usually copouts that can be easily trumped.
Imagine Berkshire Hathaway as a hedge fund 28 Feb 2011 Warren Buffett is finding it harder to beat the market while Omaha's charms aren't getting any more appealing to potential successors. It might be heresy to contemplate a 2and20like fee structure, but rewards matter. Moreover, Berkshire shareholders might still do very well.
Abercrombie owners shouldn’t wear relocation plan 25 Feb 2011 The trendy U.S. teen clothier wants shareholders to approve moving its incorporation to Ohio. That would make it even harder for a suitor to snatch Abercrombie than in already promanagement Delaware. Absent much more persuasive reasons, holders should be skeptical of the move.
Mystery helps Apple’s sales but not its governance 25 Feb 2011 It took more than a day to reveal that, with Steve Jobs sick, 30 pct of shareholders wanted to see a succession plan. Given the company's success, the low profile of the pension fund proposing the measure and the board's recommendation against, that should send a message.
LSE glitches are the price of a modernising CEO 25 Feb 2011 Xavier Rolet could have done without a fourhour trading outage especially when the London Stock Exchange boss is in the midst of a $7 bln merger with Canadian rival TMX. Buying a Sri Lankan IT Group to upgrade the LSE's systems was a gamble. But radicalism is never pain free.
Banks can do more to block dictators’ money 25 Feb 2011 Switzerland and others have frozen assets of deposed North African dictators. While they are right to seize accounts, not accepting the cash would have been better. Banks and governments have the power to investigate suspect funds. They should apply the rules more forcefully.
AIA just about deserves its lofty valuation 25 Feb 2011 The Asian insurer is throwing off cash, and grew earnings by 54 pct in 2010. But it could do better at winning new business. AIA's premium valuation rests on new CEO Mark Tucker applying the skill and aggression he previously showed when building Prudential's business in Asia.
Markets must ready for pared-down euro zone reform 25 Feb 2011 Hopes are waning that the euro zone will next month agree substantial longterm reforms to solve the debt crisis. It may still alleviate some of Greece's and Ireland's pain. But a less than comprehensive solution could disappoint markets, and drag Spain back into the mire.
Eric Daniels leaves uncertain Lloyds legacy 25 Feb 2011 The UK bank's last results under its former boss were hit by Irish woes. Daniels may have partly cleaned up the mess he helped create. But bad debts, funding and regulation are still a huge challenge. New CEO Antonio HortaOsorio will need at least a year to show any progress.
EU is right to stand up to Russia on energy reform 25 Feb 2011 The EU is at loggerheads with Russia over European energy market liberalisation, which will restrict Gazprom's control over gas pipelines. The EU can safely ignore Russian threats. Russia's real problem is that it is wedded to a business model that can't handle competition.
Twist at Generali offers hope for Italian business 24 Feb 2011 A rebel board member has pushed the Italian insurer into saying it will retain cross shareholdings only if they make financial sense. It's a blow for chairman and power broker Cesare Geronzi but a welcome challenge to cosy ties in Italian business that harm shareholder value.
Middle East could open window for Fed QE2 exit 24 Feb 2011 The St. Louis Fed boss says an improving U.S. economy renders the central bank's $600 bln bondbuying program less useful. But reversing it is tricky. As long as Libyan unrest doesn't become a fullblown oil crisis, a dose of safehaven buying may give the Fed some cover.
Freescale’s mega-LBO does not compute 24 Feb 2011 The chipmaker started to quake under its hulking debt soon after it was bought for $17.6 billion in 2006. A restructuring and a sales rebound have helped. But even if Freescale's IPO fetches the same valuation as rival NXP, the buyout foursome's investment would be halved.
Middle East crisis puts GM’s restructuring to test 24 Feb 2011 The formerlybust carmaker's shares are now hovering dangerously close to the IPO price as oil prices spike amid turmoil in Libya and elsewhere. Investors remember what happened the last time petrol prices surged. It's up to GM to show this time it's different.
Prolonged oil shock threatens global growth 24 Feb 2011 Prices nearing $120 a barrel raise the spectre of previous spikes. In the emerging world, inflation is the main concern. Recession risks are highest in postbubble western economies. But oil would have to remain high for a sustained period to inflict serious damage.
Business world takes uncommon interest in Oscars 24 Feb 2011 Capitalism walks the red carpet this year. Films linking the financial crisis to Wall Street's fondness for hookers, attacking the shale gas boom and portraying the questionable ethics of Facebook's founder are up for big awards. Wins could turn more cameras on corporate America.
DuPont closing in on $6 bln Danisco deal 24 Feb 2011 Disgruntled investors say DuPont's offer for the Danish ingredients group is too low. The dissenters could be numerous enough to sink a deal. But there's no reason to think the market hasn't done its work here in finding the right takeout price for the company.
Nasdaq counterbid for NYSE looks a stretch 24 Feb 2011 Jumping the Deutsche Boerse deal to buy NYSE's cash equities unit would require a big premium that would eat up cost savings and a partner to do the same for the rest. For Nasdaq to gear up or dilute shareholders just for a bigger share of a struggling business doesn't add up.
Deutsche’s Korea slap reflects poorly on regulator 24 Feb 2011 The Seoul regulator has accused the German bank of using options to manipulate the market. The evidence hardly looks good for Deutsche, though it may avoid worse than a partial sixmonth derivatives ban. The regulator has tightened the rules, but looks behind the curve.
Credit Suisse should escape UBS’s U.S. tax ordeal 24 Feb 2011 The indictment of current and former staff for aiding U.S. tax evasion looks bad for the previously squeakyclean Swiss bank. But that doesn't mean it will suffer the same treatment as rival UBS. Its offshore business was smaller. And the U.S. now has access to Swiss accounts.
Saudi Arabia just buys time with $37 bln handout 24 Feb 2011 The raft of financial goodies announced by the house of Saud shows it doesn't underestimate the risk of unrest. But it merely buys time. The onus is on the kingdom's rulers to show they understand the need to address the mounting social, economic and political grievances.