Month: August 2004

Parmalat finds another stick to beat up banks

13 Aug 2004

Not content with suing banks to recover cash, the bust dairy group is now saying it will ignore some of their credits as well. If Parmalat gets its way, bondholders will be pleased. But getting certainty is going to take a long time, and an almighty fight.

Dell trounces HP

12 Aug 2004

HP can blame temporary difficulties all it likes, but the real problems at the computer firm are structural. Namely, Dell is destroying its business one sector at a time.

Xstrata buys back 10% of its shares

12 Aug 2004

It is a good time to be miner, especially one with mediocre assets. Xstrata would like to grow, but does not want to buy at the peak. It is starting to act as if it thinks the good times will last. But don't imagine that the mining group's expansionary management has abandoned acquisition ambitions. The buyback is reversible. And Xstrata thinks the commodity price boom will endure. So it's probably only a matter of time before it's sniffing out another big deal.

E.on a better bet than RWE

12 Aug 2004

Both German utilities have spent the past year cleaning up after misguided acquisition sprees. Shares have rocketed. But RWE is already laying out acquisition plans, while E.on faces a selfimposed moratorium until 2006. Bet on E.on until then.

Analysts squeal to FSA on company bullies

12 Aug 2004

Instead of complaining about regulation, investment banks are now proactively encouraging it. But the UK regulator has rejected calls to legislate against companies pressurising analysts into being nice. That s ironic, but correct.

Thyssenkrupp rides steel cycle

12 Aug 2004

The engineering group's profits doubled thanks to booming steel demand. Thyssen benefits less than pure steel plays from rising prices. But if the cycle turns it is partly protected by longterm contracts. That justifies its premium rating.

Tui becomes day-traders’ plaything

11 Aug 2004

That s partly because there s lots of confusion about its value and its strategy. Tui has brought forward its results to shore up the stock. It should also find ways to maximise value.

German bankers let sleeping dogs lie

11 Aug 2004

The more Chancellor Schroeder calls for bank mergers, the less keen the banks seem on the idea. The reason? It s the economy.

Citi deserves praise for profitable dealing

11 Aug 2004

The big bank flooded a small trading platform with orders. The disruption was quite profitable. Rivals are furious. But they should be jealous, not angry. Citigroup was not exactly fair, but economies of scale rarely are. The big bank flooded a small bond trading platform with orders. The disruption was quite profitable. Rivals are furious.

Cisco story less convincing than ever

11 Aug 2004

The US networking giant claims that its burgeoning stockpile of goods is a good thing. It isn t not when Cisco s usually optimistic CEO seeing signs of tech demand faltering.

Frustrated hedge funds try a new strategy

11 Aug 2004

It s called longshort credit. At its most basic, you just buy good credits and shortsell bum ones. But then it gets trickier. And it is questionable whether every startup adopting the strategy has the right skills for it.

Hermes’ governance activists quit in board row

11 Aug 2004

The stated reason a row over their fund s independence is odd. The fund is tiny and has long been whollyowned by Hermes. Hermes had better come up with a good explanation. Its credibility as a corporate governance champion is at stake. A pair of star employees bit off more than they could chew in trying to tweak Hermes strategy by actively engaging with the board. Hermes' strategy may be a private matter. But as a corporate governance champion, Hermes needs to be open in its resolution of the conflict.

Brandes swivels guns towards Volkswagen

10 Aug 2004

The value fund manager has been buying the carmaker s shares when others have been selling their s. The reason may be that it wants to challenge the company s flawed strategy.

UBS warns of falling revenues

10 Aug 2004

The firm's optimism following a strong first quarter didn't last long. Small wonder trading income nosedived in the second quarter. In May, it expected a full recovery in investor confidence. Now it calls the lower level of client activity normal.

Islamic banking has political not financial appeal

10 Aug 2004

The UK authorities have approved an Islamic bank. They want to stay friendly with onshore and offshore Muslims. All well and good. But Islamic banking only offers more complicated versions of conventional products. Normal banks can easily compete. The UK authorities have approved an Islamic bank. They want to stay friendly with Muslims. All well and good.

Alitalia crisis lurches from desperate to absurd

9 Aug 2004

The Italian government is threatening rivals such as British Airways with legal action unless they increase their fares on certain flights. When Blair meets Berlusconi at the latter's Sardinian villa, he should make clear this is an unacceptable way to treat holidaymakers.

US joins Europe in low-job prosperity.

9 Aug 2004

Productivity is so high that more demand does not translate into more work. Weak jobs numbers are likely to endure. The problem is partly cyclical, but the lack of job creation is now a secular problem.

Chipmakers ready for push into the abyss

9 Aug 2004

Despite signs of a slowdown, chipmakers companies are pushing ahead with capacity increases. This will make the inevitable downturn worse. STMicroelectronics and Infineon, Europe s two largest chipmakers, haven t learned their lessons.

Inflationary psychology makes a global comeback

9 Aug 2004

Oil, steel, houses, health care the expectation of rising prices is spreading. Disinflation is battered, although not quite dead. The new psychology is realistic. A flood of cheap debt has already pushed up financial asset prices. Wages and consumer prices could follow.

James Murdoch fails to sell jam tomorrow

8 Aug 2004

And BSkyB's chief executive is not alone. It's never easy to persuade investors to accept less today for the chance of future riches. But if you are going to try, the secret is to keep it simple.

Pension poison should make shareholders wary

6 Aug 2004

The UK defined benefits system is a mess, and only slowly getting better. Equity investors lose out. Leverage looks less attractive. Still, the threat should not be exaggerated. A few companies have big problems, but system can easily take the strain.

Mitsubishi provides a toxic happy meal

6 Aug 2004

By issuing toxic convertibles as part of its rescue package, the Japanese carmaker gave hedge funds a free ride. This may have been the company s only way to raise badly needed cash quickly. But it was really costly.

Tiscali re-jigs rescue plan

6 Aug 2004

The internet company has mothballed a planned capital increase. It is now banking on selling E250m of assets. This looks a high price for a forced sale, especially given Tiscali hasn't managed to sell any assets yet.

Google arms its critics

6 Aug 2004

Investment banks and big fund managers have a lot to lose if Google s experimental auction process proves a tremendous success. They may get their wish. Google s greed and missteps may torpedo a welcome chance to break the US equity underwriting cartel.

Financial exports give Bank freer hand on rates

5 Aug 2004

The UK has a big comparative advantage in international finance. That s fortunate, because the industry is growing rapidly. And very little of business is done in pounds, so it is almost immune to high UK interest rates. The Bank of England can take comfort.

Barclays Capital shames investment banking rivals

5 Aug 2004

After bad results from CSFB and Deutsche, Barcap has delivered a bravura performance. It's making more money than Barclays retail bank. Is it sustainable? If the benefits of recent investment in Barcap have not emerged yet, the answer is probably yes.

Nanosys pulls IPO

5 Aug 2004

The market has come to the right decision. The US nanotech company had no business being public. The failure throws a welcome glass of cold water on the overheated nanotech sector.

Lastminute shares catch up with reality

5 Aug 2004

Its main rival recently issued a profit warning. But the UK online travel site is still talking about making good progress. That will be hard. Marketing costs are rising and competition is intensifying.

KarstadtQuelle must break itself up

4 Aug 2004

By turning itself into a miniconglomerate, it has taken the eye off its core business. Turning round its lossmaking stores will be hard. But unless it grasps the nettle, Karstadt will become an irrelevance.

M&A activity spikes in July

4 Aug 2004

A handful of big US deals, plus Abbey National, made the month the biggest since booming January. Surely one month does not make a trend. But there are some reasons to think the pace will continue briskly.