How to succeed in business without really bribing 30 Apr 2012 That’s not the title of a new Broadway musical but a vexing question for multinationals trying to expand abroad without running afoul of the U.S. Foreign Corrupt Practices Act. Without any judicial interpretation, the law has become muddled. A revamp looks to be in order.
Sunoco owners get rewarded for patience 30 Apr 2012 The 23 pct premium from Energy Transfer Partners doesn’t at first sight look huge. But given Sunoco’s unfinished turnaround, the $5.3 bln sale at a higher price than shareholders have seen in years is evidence of a well-timed leap onto the industry’s partnership M&A bandwagon.
U.S. mortgage lessons lost in student debt policy 30 Apr 2012 Lawmakers are close to making the same mistake on college loans they did with housing. When government subsidies help send prices soaring, borrowers should be restrained. To curb the crazy growth of higher education costs demands less, not more, of Uncle Sam’s involvement.
Fear factor could end calm in crude market 30 Apr 2012 Oil prices have slipped and supply looks adequate, but fundamentals don’t determine the price of crude. Easy money and trader angst could easily drive prices higher again. Current worries are Iran and thin Saudi spare capacity, but there are always reasons to expect the worst.
Microsoft gives Barnes & Noble a big brother lift 30 Apr 2012 The bookseller’s Nook e-reader ambitions looked a day late and many dollars short. Microsoft’s $300 mln injection isn’t just a one-time hand up. The agreement gives Barnes & Noble time, capital and a path to follow - even if it may sadden fans of bricks-and-mortar bookstores.
Man Group shareholders face a long hard slog 30 Apr 2012 The hedge fund manager’s share price dive has unsettled investors and prompted takeover speculation. Man’s recovery depends on turning around its flagship AHL fund. But that shouldn’t prevent chief executive Peter Clarke from dealing with some of its other shortcomings.
Sirius XM could yet reclaim the soul it sold 30 Apr 2012 When staring down bankruptcy in 2009, the U.S. satellite radio service pledged a 40 pct stake and say-so on big decisions to wily negotiator John Malone. He gave Sirius life and is now coming to collect. But there may be another deal to be done to skirt creeping control.
Hugo Dixon: Does Europe need a banking union? 30 Apr 2012 A centralised system of supervision and bailouts is increasingly viewed as necessary to break the link between troubled lenders and their equally troubled governments. This is neither necessary nor likely. But a more limited solution may be feasible.
Europe would welcome higher German wages 30 Apr 2012 Higher German consumption and more expensive exports would help balance the euro zone. Industrial action in favour of a 6.5 percent pay rise, and talks about a nationwide minimum wage, should please Berlin’s partners. But they shouldn’t hope too much, for now.
Aviva provokes subtly different shareholder spring 30 Apr 2012 The UK insurer is the latest company to review executive pay in response to investor pressure. Shareholders may have been emboldened by a rising tide of pay revolts elsewhere. But discontent at Aviva seems as much about long-term underperformance as short-term pay excess.
China and U.S. should avoid human rights fight 30 Apr 2012 A dissident takes refuge in the U.S. embassy in Beijing. It’s a diplomatic crisis, but both sides have reason to want a face-saving resolution. Though Washington defends human rights, it needs a stable and cooperative China. Beijing, meanwhile, has a chance to improve its image.
Four Seasons finally gets debts under control 30 Apr 2012 Guy Hands is buying the UK care-homes operator for an enterprise value of 825 million pounds. Private equity’s role in the sector is controversial. But this restructuring-cum-takeover should return Four Seasons to a semblance of financial health.
The rupee looks vulnerable 30 Apr 2012 India’s ballooning trade deficit means it has to run just to stand still. Without steady capital inflows, the currency will collapse. The rupee’s 19 percent fall against the dollar over the past year is worrying. Predictions of further decline could become self-fulfilling.
Lazard investors getting two for the price of one 27 Apr 2012 The firm’s Q1 results confirm asset management is its quiet powerhouse. Yet investors give Lazard virtually no credit for it - or else negatively assess the high-profile M&A advice business. A sum-of-the-parts analysis suggests Lazard is worth twice its $3.5 bln market value.
Shareholder rage at bank pay reaches tipping point 27 Apr 2012 A third of shareholders failed to back remuneration reports at both Credit Suisse and Barclays - after a similar protest at Citi. It may finally shame banks into dividing the spoils more equally with investors. But governments and customers will also want their pound of flesh.
U.S. GDP shows profit-investment disconnect 27 Apr 2012 Company profits are at a new high as a share of GDP, yet the first estimate of Q1 output showed a 2.1 pct rate of decline in private sector non-residential investment. True, the non-government sector grew at a solid 3.4 pct pace, but weak investment bodes ill for the medium term.
Spain’s true crisis is unemployment, not downgrade 27 Apr 2012 A two-notch cut to the country’s credit rating has rattled investors, but its jobless rate is the greater concern. One in four Spaniards are out of work, and with Spain back in recession, the number will rise. Even if social tension is controlled, bad debts are set to increase.
Review: Distilling Mulally’s managerial mojo 27 Apr 2012 Ford’s bickering execs quickly learned in 2006 not to underestimate their new CEO. Behind Mulally’s affable exterior lay a bright, mercurial mind. As Bryce Hoffman’s “American Icon” shows, it wasn’t Mulally alone who saved Ford. But without him, bankruptcy was far more likely.
Lawyers play high-low game with costly M&A suits 27 Apr 2012 Nationwide Mutual is paying investors too little for a rival U.S. insurer, unless it’s paying too much. Attorneys are hedging their bets, challenging the deal on both counts. While merger litigation may be hitting record highs, this transaction shows just how low legal eagles can go.
Nomura stabilises, but at a low base 27 Apr 2012 Earnings jumped in the last quarter, lifting the Japanese bank to a full-year profit. Healthier equity markets at home and better global trading both contributed, while past cost-cutting should help in the coming year. But Nomura’s weak returns mean it has much more to do.
Amazon’s investment habit looks less healthy 27 Apr 2012 The Internet retailer’s quarterly sales grew 34 pct and income was better than expected as sales of the Kindle Fire soared. That sent the stock spiking. But Amazon’s returns on its heavy investment are turning more and more anemic. Investors should be wary.
Samsung moves on from Japan to nibble at Apple 27 Apr 2012 The Korean company learned by pulling apart Japanese electronics, then reverse-engineering the business model. Having taken the lessons, it has built a commanding position in TVs and smartphones. As Apple tackles emerging markets, Samsung is showing it is still hungry.
Weak exports bring double whammy for Chinese banks 27 Apr 2012 Chinese lenders kept the country from a crisis in 2008. But now they’re facing a squeeze. Deposits are harder to find, thanks to the decline in the automatic inflow from the shrinking trade surplus. Meanwhile, losses are rising on loans to smaller businesses hit by poor demand.
Unipol probe may further muzzle Italy powerbrokers 27 Apr 2012 The Italian antitrust agency has halted bidding for Fondiaria, the country’s second largest insurer. Blocking a currently favoured bid from Unipol would be good news for minority investors. But coupled with new boardroom curbs, it could also strike another blow for corporate reform.
People’s Daily website shows profit in propaganda 27 Apr 2012 The flotation of People.cn, the online version of China’s People’s Daily, gives it a value larger than the New York Times. It gets government subsidies and advertisers love that it reaches so many officials. Western media companies can hardly ape its ways. But they are enviable.
Chesapeake tangle goes far beyond CEO 26 Apr 2012 Aubrey McClendon’s dubious dealings have the $12 bln U.S. energy giant on the back foot. But investors should also question the company’s monstrous complexity. It has convoluted off-balance sheet liabilities, hedging gains have dwarfed profit, and cash flow is steadily negative.
Detroit needs a bail-in, not a bailout 26 Apr 2012 Motown’s carmakers have roared back to life - Chrysler just posted a $473 mln Q1 profit. But there’s no such joy for Motor City itself. It’s plagued by debt, decay and despondency. Emergency cash can help. But Detroit really needs to attract new businesses. That’s a long road.
Murdochs escape grilling with only mild burns 26 Apr 2012 The media moguls are deeply mired and new evidence could yet bite. But the cross-examination by a UK inquiry could have been more damaging for the Murdochs and their company, News Corp. The governance failings don’t look much worse and UK politicians are now sharing the ignominy.
Exxon playing catch-up with dividend hike 26 Apr 2012 The oil giant’s 21 pct higher payout is a step in the right direction. But Exxon’s Q1 earnings miss suggests the move was partly a sop for shareholders. The company still made $9.5 bln, but weak U.S. gas prices, declining output and surging capex will keep investors on edge.
Danish bank rescues highlight EU’s bail-in dilemma 26 Apr 2012 The country has forced two small lenders into mergers. It’s a shift from previous rescues, when senior creditors took a haircut. That should calm bondholders’ nerves about Danish bank paper. But it underlines the difficulties of pushing through a new resolution framework.