Worse still to come for Research In Motion 30 Mar 2012 After losing $70 bln of market value in less than four years, the BlackBerry maker’s latest results horrified again. Sales tumbled, margins fell, inventories rose and more executives left. Its next operating system or a sale might provide salvation. But those seem like longshots.
Lottery mania behavioral quirk also causes bubbles 30 Mar 2012 Punters on the $540 mln Mega Millions U.S. jackpot are fixating on what they’ll do with their winnings. This economically regressive and socially destructive behavior also drives the gambling business. In markets the same impulse creates bubbles and encourages rogue traders.
New financial watchdogs won’t thrill Wall Street 30 Mar 2012 Congress has finally given the nod to some of President Obama’s appointees to the FDIC and OCC. None of the fresh faces is likely to rock the boat much. But one of the banks’ stronger supporters is now gone and the new guard has little reason to push back against Dodd-Frank.
Review: Fictional financiers remain elusive 30 Mar 2012 Despite the crash, recent novels have produced few memorable investment bankers. Roger Yount, the anti-hero of John Lanchester’s “Capital”, might have been an exception. Sadly, his tale is lost in the sprawling novel’s attempt to capture a cross-section of London.
Sweat-free iPads come at a price worth paying 30 Mar 2012 Apple scores points for pushing to improve life for workers at the Foxconn “iGadget” factories in mainland China. But change may have been inevitable thanks to rising wealth and labour shortages. Consumers, ultimately, may have to foot the bill, but they should be OK with that.
Hong Kong still haven for tycoons – and investors 30 Mar 2012 Two property moguls have been nabbed by the corruption watchdog. It’s a welcome sign that the city’s plutocrats aren’t untouchable. While conspiracy theories abound, they are far-fetched. If politicians wanted to clip the tycoons’ wings, there are more effective ways to do so.
Euro zone numbers game could leave IMF cold 30 Mar 2012 Finance chiefs are fiddling figures in an attempt to boost the nominal firepower of Europe’s bailout fund. The compromise is necessary to persuade the IMF to pledge more money as well. But the developing countries that have growing clout within the fund are unlikely to be fooled.
Ireland gets slim pickings from ECB deal 30 Mar 2012 Dublin is trumpeting the fact that it has been allowed to make a 3.06 bln euro injection into its banks with a long-term bond rather than cash. But the elaborate arrangement actually delays the problem by just a year - and the wider issue is, as yet, no nearer to being solved.
Int’l Power non-execs have some leverage over GDF 30 Mar 2012 The UK energy firm has had a 6 bln stg approach from GDF for the 30 pct that the French group doesn’t own already. Bid rumours have already effectively added a slim premium to IPR shares. But its independent directors still have some power to push for a bit more.
Bank of England pressured by Treasury mea culpa 30 Mar 2012 The UK finance ministry has published an internal report criticising its handling of the crisis. Following the Financial Services Authority’s multiple exercises in self-flagellation, the central bank’s continued refusal to publicly examine its own performance looks unsustainable.
New bank plan risks dilution of emerging influence 30 Mar 2012 The BRICS are mulling the creation of an institution with aims similar to the World Bank. But an Emerging World Bank may diffuse the effort, capital, and talent dedicated to global economic development. BRICS may also struggle to secure their rightful influence over the original.
IPO feeding frenzy isn’t quite ready for Facebook 29 Mar 2012 Investors are devouring stock debuts. Even shares of a humble mac ’n’ cheese maker like Annie’s almost doubled. But that’s more a sign of recovery than exuberance. Most recent deals have been small and only just started popping. A hefty sale like Facebook’s has yet to be tested.
Oil billionaire shows how to handle M&A conflicts 29 Mar 2012 Continental CEO Harold Hamm has persuaded the firm to buy another of his companies, Wheatland. That’s prime territory for stiffing shareholders. But both executives and the board appear to have played it fair. It’s a good blueprint for other firms, and Wall Street, to follow.
Obama backs healthcare defender – until he doesn’t 29 Mar 2012 Despite top lawyer Donald Verrilli’s stumble before the Supreme Court, the White House gave him a confidence vote. That’s what famed Yankees manager Billy Martin would get before being fired. Verrilli’s miss may not change the result but it costs him credibility - if not his job.
Europe can learn to live with German inconsistency 29 Mar 2012 Berlin seems ready to expand Europe’s bailout fund, while the Bundesbank keeps criticising the ECB’s liquidity splurge. Germany is seeking to balance economic pragmatism and monetary intransigence. Yet this need not obstruct the debate about reviving economic growth.
Intel and ARM heading for bloody chip collision 29 Mar 2012 Intel dominates the market for PC processors. ARM Holdings-powered chips run nearly all phones and tablets. Their skirmishing over tablets is just the start of what is likely to become a full-fledged brawl as both firms invade the other’s territory. Investors look out.
Spain can’t avoid austerity conundrum 29 Mar 2012 A general strike won’t turn back the clock on labour market reform and the coming budget cuts look inevitable. Too much austerity could be self-defeating and even unrealistic, but Prime Minister Rajoy cannot afford to waver after his earlier deficit faux pax.
Sanctions could cost Iran $50 bln 29 Mar 2012 Top buyers of Iranian crude are cutting back and the government may soon have to offer discounts to shift supplies. The higher crude price would only partly counter these factors. Tehran could lose half its oil revenue and soon face the pinch.
Roche makes tactical gain with Illumina sweetener 29 Mar 2012 The Swiss drugmaker has upped its unsolicited offer for Illumina by $1 bln to $6.7 bln – a smidgen above the gene firm’s market value. That puts real pressure on the board to talk. The stage is set for Roche to add a last sweetener in return for a recommendation.
India’s tax grab threat could backfire badly 29 Mar 2012 Investors fear that New Delhi will use tax law changes that could trap Vodafone to snare offshore institutions. If that’s not what the government intends, it should say so. If it is, the value of nearly all investment assets is endangered. Capital inflows could slow to a trickle.
Dodger blue outshines gold after $2 bln deal 28 Mar 2012 The sale of the Los Angeles baseball team represents almost a five-fold gain in value since 2004. Gold aside, returns on sports franchises blow away most other major asset classes, including stocks. The demand for such trophy investments from the ultra-rich is stoking prices.
Even booming markets leave CLOs on the sidelines 28 Mar 2012 That’s a good thing. Carlyle’s $510 mln deal shows they can still be done. But both buyers and sellers are sticking with far less racy offerings than during the bubble. That limits the fuel for LBO shops, but means CLOs should be going only to investors who understand them.
Goldman Sachs now treats shareholders like muppets 28 Mar 2012 The firm criticized for ripping off clients is doing just that to investors. Goldman has long argued that its presiding director fulfils many of the duties of an independent chairman. Renaming him lead director to head off a chairman/CEO split is the underhand trade of the year.
Regulator holds key to unshackling RBS from state 28 Mar 2012 Interest from Middle Eastern funds has raised hopes the UK government might shrink its stake in the bailed-out lender. But any sale is doubtful until RBS has escaped costly state insurance. To do so, it must first persuade the Financial Services Authority it has enough capital.
Bertelsmann’s IPO groundwork signals new ambition 28 Mar 2012 The new CEO of the German media group is making his mark, changing its structure to enable a float without immediately compromising family control. There’s also a new urgency to finding sources of growth. Equity-financed M&A seems likely to be the eventual outcome.
Not all M&A and financial engineering is worthless 28 Mar 2012 That’s the read from Tyco’s spin-off and merger of its flow control business with Pentair. This paper-shuffling allows the two firms to cut costs and taxes, creating synergies worth a cool $1.5 billion. That provides a nice feast for shareholders to divvy up almost equally.
Gupta’s quiet win is loud warning for prosecutors 28 Mar 2012 Granting the former Goldman director access to government notes may help him parry insider-trading charges, but it also puts teeth in rules for sharing evidence. Recent cases show prosecutors too often hide crucial information. The Gupta ruling should help put an end to that.
North Sea blowout hardly justifies Total meltdown 28 Mar 2012 An out-of-control gas well off the UK coast has wiped 8.5 pct off the French oil major’s share price in three days. After BP, investors have acute fears about runaway deep sea disasters. But the reaction so far looks excessive.
Taiwanese money can’t save Japan from Samsung 28 Mar 2012 Foxconn’s $1.6 bln investment into Sharp buys Japan’s electronics company time. But there’s a huge glut in flat-panel screens and the likes of Sharp, Panasonic, Sony and Toshiba may be fighting a losing battle against the Koreans. As Hitachi has shown, it may be best to withdraw.
With TCI’s help, Coal India could top the Sensex 28 Mar 2012 Chris Hohn’s investment fund is raising the stakes in its tussle with New Delhi over the pricing of coal. The challenge is to win the policy argument as well as the legal one. Since reform could make Coal India the biggest company quoted in Mumbai, the outcome could be win-win.