BREAKINGVIEWS

EU can afford to shunt Siemens-Alstom to a siding

18 January 2019

Margrethe Vestager may well block the rail groups’ merger. That would rile German and French politicians yearning for a European champion to face down distant fears of Chinese dominance. But if the antitrust tsar pulls the plug, neither Siemens nor Alstom would suffer too much.

Context makes Santander’s Orcel fail even worse

18 January 2019

The Spanish bank expected UBS to honour a portion of its would-be CEO’s deferred pay. But recent executive moves at Deutsche Bank and Barclays saw new hires compensated in full. Andrea Orcel’s acceptance of a cut was a concession – making it all the odder Santander backed out.

Telecom Italia’s new boss needs some quick wins

18 January 2019

The Italian telco’s shares have dived after a profit warning. New CEO Luigi Gubitosi can stop the rot by listing its fixed network, but that path is slow and uncertain. A quicker route to credibility lies in selling stakes in choice assets like Inwit and the Brazil business.

Ryanair will weather fare squeeze

18 January 2019

The low-cost carrier expects to make less post-tax profit this financial year than previously anticipated as CEO Michael O’Leary cuts fares to attract customers. That’s tough as he is having to pay staff more. But passenger numbers are growing fast enough for his bet to pay off.

Sophos crash dents London’s tech dreams

18 January 2019

The cybersecurity firm’s shares fell by a fifth after it warned of weak orders. It adds to other recent large listings, like Funding Circle, that disappointed. Battered investors, and loss of talent from Brexit, will make it harder for the UK to become a European technology hub.

Fortnite outplays media titans in a battle royale

18 January 2019

The video game may have raked in as much as $2.4 bln in sales last year, more than any 2018 Hollywood blockbuster. Now Netflix says it is threatened too. Success comes from mass appeal: both young and old gamers are hooked. Streaming giants and movie outfits are right to be alarmed.

Jamie Dimon puts America and himself first

17 January 2019

JPMorgan’s CEO said last year he wanted the U.S. tax cuts “shared broadly.” And he followed through, boosting low-paid workers’ wages and opening branches in poorer areas while also growing the bank’s earnings. But taking a $1.5 mln pay hike himself is unnecessary and tin-eared.

Slack is the tech everybody likes but no one needs

17 January 2019

That’s one problem for the messaging service as it gets ready to go public. It’s popular, but not a must-have for companies. Another issue is its current $7 bln private-market valuation. Based on other high-flying software firms, it’s only worth just over half that amount.

JPMorgan bankers win Wall Street pay game

17 January 2019

Jamie Dimon’s firm is the only one to increase average compensation for investment bankers and traders in 2018, boosting it more than revenue rose. Jefferies still pays the most, but it’s less generous than it was. Goldman and Morgan Stanley have the mix just right.

Jack Bogle defined value in more ways than one

17 January 2019

The Vanguard founder turned the once-heretical idea of indexing the broad stock market into the dominant form of investing. Instead of pursuing riches, he spread the low-cost ethos, saving investors untold billions and building a $5 trln juggernaut. Talk about wealth creation.

Morgan Stanley takes Wall Street’s wooden spoon

17 January 2019

James Gorman’s bank did worse than rivals last quarter, delivering only a 7.1 pct annualized ROE. Fixed-income revenue slumped and lending losses made things worse. Morgan Stanley’s valuation premium is partly because it’s supposed to be more stable. That logic just took a knock.

Size matters less than gold miners think

17 January 2019

Newmont's $10 bln Goldcorp purchase creates a behemoth, and the U.S. miner has talked up options from extra assets, plus steady output and dividends. But its investors are right to be sceptical. Management will have to over-deliver on synergies to secure them a good return.

SocGen warning boosts investment bank sceptics

17 January 2019

The French group blamed market volatility for a one-fifth drop in trading revenue in the fourth quarter. A flat dividend paid partly in shares hints at further capital headwinds. Investors who attach a discount to lenders with large capital market arms will feel justified.