BREAKINGVIEWS

WPP underestimates pinch from corporate austerity

23 August 2017

The ad group cut its 2017 net sales guidance, blaming lower spending by consumer-goods giants which make up about a third of revenue. Boss Martin Sorrell reckons this will reverse. The danger is that zero-based budgeting and shareholder activism make frugality the new normal.

Italian markets dance anew to Berlusconi discord

23 August 2017

Chased out of power in 2011, Silvio Berlusconi is spooking investors with talk of a parallel currency. The ex-PM’s plans look more like posturing than policy. His own finances wouldn’t obviously benefit from Italy leaving the euro. Yet Berlusconi remains too important to ignore.

Tencent’s team has upper hand in Chinese food fight

23 August 2017

China’s three web giants are supporting rival food-delivery firms, in a big bet on “online-to-offline” services. The leader, Tencent-backed Meituan-Dianping, is cashed-up and looks unassailable. Even a mooted merger of its rivals could distract them and help bring subsidies down.

Energy landscape is a battle for next Chevron CEO

22 August 2017

John Watson is set to step down as leader of the $200 bln energy giant after more than seven years. With oil prices low, a fresh approach may make sense. Yet Chevron has weathered challenges decently. Any new boss, especially if home grown, will struggle with long-term headwinds.

Jeep sale would leave Marchionne nowhere to hide

22 August 2017

The Fiat Chrysler CEO advocates using M&A to stop carmakers wasting precious capital. Selling the company's top brand to China's Great Wall - a long shot politically - might raise $23 bln. But it would leave an emaciated rump and set up Marchionne’s last lap to be a dismal one.

Blank M&A checks are getting too easy to write

22 August 2017

The NYSE relaxed voting rights and other rules to clear the way for shell companies like recent ones from TPG to list. Rival Nasdaq had been capitalizing on the resurgence of such acquisition vehicles. An otherwise weak IPO market is chipping away at investor protections.

Snap won’t easily pull a Facebook-Google-Alibaba

22 August 2017

The messaging app's stock is 20 pct below the IPO price. That's territory its big internet predecessors encountered before roaring back - and beyond. Evan Spiegel's creation could snap back, but it's on weaker footing and losing money.

McDonald’s ain’t loving the local Indian recipe

22 August 2017

The U.S. burger chain is taking the nuclear option, shutting 169 stores as a spat with a partner boils over. It's one reason McDonald's has fallen behind rivals in a huge potential market. Partnerships are always vulnerable but India's byzantine legal system raises the stakes.

Murdoch’s Sky bid looks ever less rational

22 August 2017

The media mogul’s Fox last year offered 11.7 bln pounds for the 61 pct it doesn’t own of the pay-TV firm. Sky’s subscriber growth has since slowed and a regulatory review has brought political heat. It may not stop him, but Rupert Murdoch will struggle to make the deal pay.

Provident Financial kneecaps cash-greedy investors

22 August 2017

The door-to-door lender slashed its profit forecast, ousted its CEO and is under investigation from the UK authorities. Worse still, the dividend yield just fell from 8 percent to zero. Yield-chasing funds had fair warning the company was living beyond its means.

BHP uses commodity rally to fortify position

22 August 2017

The Anglo-Australian miner swung to an annual net profit of $5.9 bln. Plans to exit a troubled shale business and hold off on investing in potash chime with demands from Elliott, an activist hedge fund. The compromise, plus more focus on financial strength, looks sensible.

Three steps to an Infosys reboot

22 August 2017

The $31 bln Indian IT giant is in a mess after its CEO quit. To restore confidence, it needs fewer bosses and to find a strong outside CEO. Publishing a report into whistleblower claims would also help draw a line under a founder's complaints of mismanagement.

Activists lack salve for hospitals’ financial ills

21 August 2017

Hefty debt, rising costs and painful changes to health insurance make the likes of Tenet and Community Health easy patients for pushy shareholders like Glenview. But the usual remedies will achieve little and there are few obvious buyers. Palliative care may end up an option.