Silicon Valley rule of thumb points right way 31 Aug 2015 In a land that fetishizes revenue growth over profitability, there’s a new sanity check for software firms to see if the two rates add up to at least 40 pct. A Breakingviews analysis suggests it can be a useful guideline. Investors should just be wary of extrapolating too much.
Fed dilemma is mostly good news 31 Aug 2015 Vice Chair Stanley Fischer reckons inflation is only temporarily subdued. Along with the BoE’s Mark Carney, he also downplayed China’s deceleration. The Fed’s doves, meanwhile, remain wary of raising interest rates. The split is evidence the U.S. economy is finally mending.
BNY Mellon fund-pricing glitch exposes dangers 31 Aug 2015 The U.S. bank’s SunGard-provided system for valuing mutual fund assets is working again a week after going down. This time, damage was minimal. But the episode reveals potential risks from bugs in software to over-reliance on third-party vendors and scrimping on costs.
Hugo Dixon: Greek election may reopen can of worms 31 Aug 2015 Given that no party is likely to emerge from next month’s vote with a majority, it may be hard to form a strong government that can implement the country’s new bailout deal. There’s even a risk that there will be yet more elections. That could tip Greece back into crisis.
El Corte Ingles deal marred by dynastic feud 31 Aug 2015 The Spanish department store has ousted a dissident family shareholder after it objected to the 1 bln euro stake sale to a Qatari Sheikh. That seems draconian, even if the terms of the deal lately look better for the Sheikh. It reflects the big challenges facing the company.
Suzuki can clear capital roadblock with VW buyback 31 Aug 2015 The Japanese carmaker has skimped on dividends and amassed a huge cash pile during its long feud with 19.9 pct owner VW. Now the German group must sell and Suzuki wants to buy the $3.8 bln stake. That would mean a big boost to earnings - and hearten Suzuki’s hedge fund fan club.
Slowing growth exposes Chinese banks’ debt debris 31 Aug 2015 Dodgy credits on the balance sheets of China’s four biggest lenders rose 28 pct in the first half of the year – much faster than the banks replenished provisions. Though overall bad debt levels remain low, continued deterioration threatens to reverse years of profit growth.
China capital flight inspires enlightened scam 31 Aug 2015 U.S. investigators say a former Buddhist monk conned $125 mln from 250 investors seeking U.S. visas. China’s sputtering economy has fueled a booming market for immigration by investment. It won’t be the last time the country’s worried wealthy are relieved of their worldly goods.
White House hopefuls all agree: China is the worst 28 Aug 2015 Move over Wall Street. U.S. presidential candidates have a new bipartisan punching bag. From Tea Party favorite Donald Trump to socialist sweetheart Bernie Sanders, the entire field has reasons - ranging from crushing stocks to hacking to trade - for dissing Asia’s superpower.
Freeport-McMoRan leaves Carl Icahn lots of targets 28 Aug 2015 Big cuts in spending and staff sent the struggling miner’s stock soaring – just before the activist revealed an 8.5 pct stake. The pre-emptive strike won’t be enough to satisfy the feisty billionaire. High debt and low commodity prices suggest he has asset sales in his crosshairs.
Review: Ben Bernanke and a global monetary plague 28 Aug 2015 Ever since the collapse of Lehman Brothers, the Federal Reserve has engaged in financial experimentation that has delivered the weakest rebound on record while spreading deleterious effects around the globe that author Brendan Brown, in a forthcoming book, likens to a plague.
Google EU antitrust spat riddled with holes 28 Aug 2015 The search giant’s robust response to a European challenge over price comparison tools ratchets up a complex theoretical battle over what makes a monopoly. Yet the dispute misses a broader point: it’s hard to see how any likely outcome will make a massive difference to consumers.
Lower oil will unclog more pipeline deals 28 Aug 2015 For oil majors desperate to protect their dividend, selling non-core infrastructure not linked to oil prices is a no-brainer. There is plenty of interest from investors, as Total’s pipeline sale in the North Sea shows. That should help overcome thorny deal issues.
Hermes shows real luxury is a scarce asset 28 Aug 2015 Despite quadrupling sales in 10 years, the French group has kept supply below demand better than listed rivals. An operating profit margin of almost 33 percent has helped it dismiss sector woes with a Gallic shrug. The 50 percent premium to peers looks steep but justified.
With strong new backer, Olam gets what Noble needs 28 Aug 2015 Mitsubishi is backing a Singapore-listed trader bashed by short-sellers, paying $1.1 bln at a big premium. Noble needs such a vote of confidence. But the Japanese group is actually endorsing Olam – a firm supported by Temasek that has been spared the worst of the commodity rout.
China bad bank pays high price for respectability 28 Aug 2015 Cinda Asset Management started as a dump for dodgy bank loans but expanded into funds, insurance and brokerage. Now it’s looking to swallow Hong Kong lender Nanyang for around $8.8 bln. At more than twice its own book value, Cinda needs many benefits to make the deal stack up.
Malaysia fund mess gives Abu Dhabi no good options 28 Aug 2015 Troubled 1Malaysia Development Berhad denies a state-backed fund is pulling a $5 billion lifeline. Abu Dhabi’s relationship with 1MDB has become an embarrassment, and Malaysia’s sliding currency complicates the bailout. But walking away would make things worse for the Gulf state.
Rob Cox: Double-duty CEOs are a worrisome trend 27 Aug 2015 Fiat boss Sergio Marchionne may don another hat to run Ferrari. Like Jack Dorsey and Elon Musk, however, he’s only human. Investors in public companies, especially young or challenged ones, require full attention from a leader. That’s all but impossible when he’s running two.
Dole boss is bad apple for buyout barrel 27 Aug 2015 A judge says David Murdock duped shareholders, independent directors, lawyers and bankers when he took the produce vendor private two years ago for $1.6 bln. The deceit will cost him $150 mln. It’s also a sad reminder that even carefully vetted deals can be rotten at the core.
Coke’s sparkling H2O talk is a bit too fizzy 27 Aug 2015 The soft-drinks giant has done more than many corporations to nurture water resources. Now CEO Muhtar Kent reckons he can hit Coke’s goal of replenishing every liter it uses five years early. But the company’s claim that it will be water neutral doesn’t yet pass the taste test.
Solid U.S. growth trumps stock market sideshow 27 Aug 2015 GDP expanded at a 3.7 pct pace in the second quarter and 2.7 pct year-on-year. The jobs market looks steady. For central bankers like the Fed’s Bill Dudley, that ought to be more “compelling” than the now-arrested slide in shares. Zero interest rates are past their sell-by date.
Fake Goldman Sachs belies a real China strength 27 Aug 2015 The U.S. investment bank joins a long list of counterfeits that includes Apple stores, police stations and British villages. They’re easy to mock, but also veil a broader readiness to bend rules in search of profit. Properly channelled, that ingenuity and pluck could be powerful.
Bondholders escape Ukraine with only mild scratch 27 Aug 2015 War-torn Ukraine has agreed a 20 percent haircut with a group of rebellious creditors. That’s half the loss Kiev originally wanted. Yet it’s not much of a victory for lenders either: with the economy in tatters and doubts continuing, creditors will be lucky to escape another hit.
Markets are a test of central bankers’ backbone 27 Aug 2015 Equities are rallying after a Fed official cast doubt on the need for a September rate rise. China’s slowdown and sliding commodities may warrant circumspection among global central bankers. But market gyrations don’t. Monetary policy inaction should be for the right reasons.
Shell-BG merger still works with cheap oil 27 Aug 2015 The tumbling oil price has raised fears that Shell shareholders might balk at the $70 billion the Anglo-Dutch energy group agreed to pay for smaller rival BG. While the premium may now look bigger, so should the cost savings, even now that black gold has lost its shine.
Luxury faces tough quest for next big market 27 Aug 2015 China’s slowdown and weaker currency have hit share prices of bauble-peddlers LVMH and Swatch. The hunt is on for luxury’s next hotspot. India and Brazil show promise, but a mix of scale, rising incomes and inequality is elusive. Better opportunities may be closer to home.
Stock rout will blow hole in China’s deal pipeline 27 Aug 2015 The selloff has brought an abrupt end to a record-breaking run for share sales in the People’s Republic. This will hurt local brokers, which dominate onshore listings, more than foreign banks. A sharp slowdown in Chinese M&A, up 70 pct so far this year, also looks inevitable.
Chinese mogul takes on extreme triathlon challenge 27 Aug 2015 Wang Jianlin’s Wanda group will buy the operator of Ironman events from its private equity owner for $650 mln. Endurance sports are booming. But turning China’s newly affluent onto day-long stints of running, swimming and cycling looks harder than luring them into Wang’s cinemas.
Schlumberger’s daring deal looks carefully hedged 26 Aug 2015 The oilfield services provider is moving outside its comfort zone to buy drilling gear maker Cameron for $15 bln even as the price of crude falls. The 56 pct premium is flattered by the market selloff and covered by cost savings. Schlumberger may have threaded the M&A needle.
Monsanto leaves Syngenta facing awkward questions 26 Aug 2015 The world’s largest seed maker has given up pursuit of its Swiss rival. The $46 bln deal required aggressive assumptions and carried risks. Syngenta’s management now needs to prove its reluctance to talk was worth it.