BREAKINGVIEWS

Goodbye tracking stocks – don’t hurry back

11 December 2018READY SOON

Dell’s $23.9 bln plan to buy back paper that mirrored the performance of subsidiary VMware received shareholder approval. Like most tracking stocks, it consistently traded at a discount because holders had few rights. That sounds like a bug; for Dell it proved a handy feature.

Google finds Congress still searching for a clue

11 December 2018READY SOON

U.S. lawmakers who grilled company chief Sundar Pichai failed to land a blow, and showed themselves ill informed about what the search engine actually does. The knowledge gap is risky for tech firms, because it increases the risk of regulation that misses the mark.

Big Tech has a mission in U.S. flyover country

11 December 2018

Facebook and its rivals need friends in Washington, yet they mostly aid the urban elites. That’s a missed opportunity, because it’s in America’s interior that they can do more good, by creating jobs. That would be a slow but lasting way to build goodwill.

CVC’s $3 bln Nordic LBO do-over needs new tricks

11 December 2018

The buyout firm is taking control of Ahlsell again, two years after selling out of the Swedish distributor. Its recent ownership suggests there won’t be much scope to cut more costs. To get a decent return this time, CVC will have to pile on debt and hope for revenue to pick up.

General Electric can go from bad to worse in 2019

11 December 2018

The industrial group led by Larry Culp is mostly being propped up by its aviation arm as its power business sucks wind and its finance unit consumes cash. The risk is that cyclical, financial and competitive headwinds kick the strongest leg of the stool out from shareholders.

“Pere Noel” Macron won’t cheer marchers or markets

11 December 2018

France’s president pivoted from Teutonic austerity to Matteo Salvini-ish populism in response to violent protests over inequality. He pledged state cash to help the underpaid and pensioners. That may push up French borrowing costs without pleasing those in yellow vests.

Global equities offer value trap in 2019

11 December 2018

After two sharp corrections in 2018, U.S. earnings multiples are near 10-year averages. Yet aside from the dot-com bubble, U.S. stock valuations have never been higher in cyclically adjusted terms. With leading economic indicators stretched, they may be built on sand.

WPP’s new investor pitch contains too much hot air

11 December 2018

CEO Mark Read wants to slash costs and get the $13 bln ad group growing in line with rivals by the end of 2021. That’s the right idea. But his growth plan looks heavier on jargon than detail, while cuts are modest. Overall it’s less convincing than one of WPP’s whizzy campaigns.

Telecom Italia stuck in activist feedback loop

11 December 2018

Top investor Vivendi wants to overhaul the Italian telco’s board months after a coup by rival Elliott. Regaining control looks hard and Elliott would remain a thorn in the French group’s side. Unless the two find common ground, a governance discount will weight on TIM shares.

Apple case underscores Chinese tech ties that bind

11 December 2018

A mainland court banned the sale of older iPhone models just days after Huawei’s CFO was detained in Canada. Meanwhile, U.S. regulators have revived old concerns about Chinese audits. Trade-war-related or not, the decisions allude to how many connection points there are to sever.

China’s export mystery may grant economy reprieve

11 December 2018

Shipments manage to keep rising despite U.S. tariffs. Many assume it’s due to “front-loading” orders to get ahead of duties, yet evidence is thin. If foreign demand has been a genuine driver up to now, Beijing will have a far easier time coping with the looming slowdown.

SoftBank IPO investors mute shrill market signals

11 December 2018

The Japanese group is set to raise a whopping $24 bln in its domestic mobile business float. That makes it one of the world’s most highly valued carriers even as upstart Rakuten becomes a potential threat. Fresh jitters involving Chinese kit also may demand a greater discount.

Buyouts are the new activism at Elliott

10 December 2018

Months after putting it in play, Paul Singer’s hedge fund is joining a $4.4 bln buyout of Travelport. Public investors don’t value the e-commerce also-ran, and getting margins near leader Amadeus may reap big gains. It’s a new way for Elliott to put its money where its mouth is.