Month: January 2005

US protectionism threatens IBM PC sale

24 Jan 2005

US regulators may block the purchase of IBM s PC operations by Chinese manufacturer Lenovo on national security grounds. This looks like straightforward protectionism.

Vandevelde to become Carrefour chairman – report

24 Jan 2005

It looks like the French supermarket group s owners are preparing their defence against a potential bid for the company. Vandevelde helped Marks & Spencer see off a bid by quitting as chairman. Now the boot could be on the other foot.

Can Kleinfeld transform Siemens?

24 Jan 2005

The real challenge for the German conglomerate s new chief will be to assert control over its managerial bureaucracy. His success will ultimately depend on the backing of his predecessor and future boss Heinrich von Pierer.

Eurozone instability risk is rising

24 Jan 2005

Finance ministers may strike a compromise to revive the eurozone stability pact. But their dispute shows the ethos of restraint is fading. The habit of excessive borrowing could easily become an inflationthreatening addiction. Bond investors might be too complacent.

Retail LBO craze may take a knock

23 Jan 2005

The situation at Allders, where debt was piled onto an underperforming UK retailer, shows how such deals can go badly wrong. Investors betting that private equity will snap up bombedout retail stocks should beware.

MM02’s valuation ignores looming challenges

23 Jan 2005

The UK mobile operator s shares have soared amid excitement over rising customer numbers. But pressures on MM02 s revenues lie in store. Its spending needs are increasing too. Neither challenge is reflected in the share price.

Argentine creditors should take the money

21 Jan 2005

The government cannot afford to pay much more than its current offer of 25% of the value of its debt. And it may pay nothing to refuseniks. The time to complain about Argentine debt policy was in the 1990s, when the country was recklessly borrowing. It s too late now. The government has upset investors by offering only 25% of the value of their debt. And it may pay nothing to refuseniks. The government has upset investors by offering only 30% of the value of their debt. And it may pay nothing to refuseniks.

What happened to the hedge fund deal boom?

21 Jan 2005

GLG s talks with Lehman have got bogged down on price. RAB Capital has yet to use its listed stock for a deal. JP Morgan s purchase of Highbridge four months ago has yet to lead to a flood of deals. That's because executing such deals is tough.

Potential buyers circle Reuters’ Instinet

21 Jan 2005

The news firm has done a good job of rustling up competition in a limited field for Instinet, the electronic brokerage it wants to sell. Reuters stake is worth some £800m, or 57p a share. Investors expect much of that to be handed over to them.

Europe more vulnerable than US if GM junked

21 Jan 2005

The US carmaker has so many bonds outstanding that highyield investors would be swamped with paper. Although most of this debt is in dollars, European investors would have the bigger indigestion problem. The US market is much deeper.

Goldman Sachs to raise $7bn buyout fund

21 Jan 2005

It's the latest firm to cash in on institutional enthusiasm for buyouts and increasing discrimination in favour of industry leaders. The funding frenzy must depress returns in the long run. But with public securities markets yielding such low returns, no one seems to care.

German companies return to IPO market

21 Jan 2005

Last year s flops haven t deterred a lossmaking TV company and a restructured mortgage bank from submitting IPO plans. They may be trying to exploit the stock market s recent strength. But they will certainly test investors' appetite for new issues.

Don’t bet on Galeries Lafayette

20 Jan 2005

But even if GL broke itself up, it would struggle to extract much more value than currently implied by the share price. The French department store's investors may hope Credit Mutuel's stakebuying heralds some big corporate restructuring.

SABMiller won’t get Bavaria cheap

20 Jan 2005

It is not surprising that SABMiller is interested in Colombia s Grupo Empresarial Bavaria. So is every other major brewer. Bavaria is one of the few remaining attractive emerging market opportunities in the industry. That is why it won t come cheap.

More investors should fear dollar crisis

20 Jan 2005

The consensus is that currency adjustments will not block global growth in 2005 and 2006. Even professional dollar pessimists agree. The markets believe the decline in US currency will have little impact on global growth in 2005 and 2006. But this may be too optimistic. But this optimism has more to do with trends than with logic. A dollar collapse could cause a major economic disruption. The markets believe the decline in the US currency will have little impact on global growth in 2005 and 2006.

Vivendi probe puts spotlight on hedge funds

20 Jan 2005

The question is whether privileged information was misused in the French media group s controversial convertible bond issue in 2002. Whatever the answer, it would be a good idea for the procedures involved in the premarketing of such deals to be clarified.

Who will control the new Parmalat?

20 Jan 2005

Both banks and bondholders are capable of seizing control once their debts are swapped for new equity. Bondholders should beware. If the banks run the show, Parmalat might find it harder to claw back value from them via lawsuits.

Ebay cuts growth forecast

20 Jan 2005

But when a stock is priced for supercharged growth, as Ebay was at 66 times 2005 EPS, look out below. Even after this warning, the online marketplace is still on track to record an envyinducing 25% rise in profit this year.

Citigroup looks like a bargain

20 Jan 2005

There are a few "ifs" to this conclusion. Interest rates must not spike, and the bank s regulatory woes must be a thing of the past. The group s portfolio is better balanced geographically and by product than its rivals, which trade at a premium.

JP Morgan falls short in Q4

19 Jan 2005

The US bank's merger with Bank One is not yet bearing much fruit. Revenues were flat while costs actually rose. Two quarters after the completion of the merger, the integration looks messier than expected.

Goldman sets high hurdle for bonus round

19 Jan 2005

Its payouts were apparently 1520% above the other banks that have announced bonuses so far. As first to announce, Goldman was firing in the dark. It also had to please juniors who lost out last year. Rivals may not be so generous.

Investment banks don’t need poison pills

19 Jan 2005

Their businesses are largely dependent on human capital. That means hostile takeovers are rare anyway. Yet Lazard suggests it may adopt such provisions, and Goldman clings to its "flipin" pill. They should follow Morgan Stanley and drop them.

FSA manages to be both too hard and too soft

19 Jan 2005

The UK financial regulator never seems to get it right. It was eager not to appear timid after the splitcap debacle. Now it has shot itself in the foot in the L&G misselling case. The adverse judgment may encourage its tendency to downplay risky products.

New Airbus is more about packages than people

19 Jan 2005

Airbus s new ''super jumbo'' may well change the face of long haul travel. But its biggest effect will be felt in the freight market. This is also where the A380 s true threat to Boeing lies.

Russia backtracks over benefit reform

19 Jan 2005

True, the measure was botched. But backtracking by Russia's "tough guy" president may make future reform more difficult. That may not matter now when oil prices are high. But Russia's ramshackle system of government may be exposed if things deteriorate.

Fastweb’s E800m rights issue is a good idea

18 Jan 2005

The Italian group wants to invest more in broadband while rivals are hamstrung. Investors should back it. This is the first big deal in the current telecoms cycle to fund expansion rather than to plug balance sheets.

Tesco cautions on future growth

18 Jan 2005

The UK supermarket giant says it will be happy with 34% likeforlike growth this year down from its stellar 7.6% growth over Christmas. Tesco will slow as rivals recover. But the 34% figure looks like expectations management. It should do better.

Baer family and staff cede control for no premium

18 Jan 2005

But they re getting some compensation: in swapping their supervoting stock for listed shares, they ll find it easier to sell out. Still, they seem ambivalent about losing control. They may be confident Baer will keep its independence. But it will have to earn it.

ABN chief invites bid at a premium

18 Jan 2005

That s the clear message from comments in a newspaper interview that the Dutch bank s destiny may be as "junior partner" with a larger bank. This is not how the national champions of European banking normally talk.

Deutsche Boerse should hold vote on LSE deal

18 Jan 2005

True, the German exchange probably isn't legally obliged to offer one. But it is a huge deal that is likely to be done at a high price. On those grounds alone, the shareholders deserve a say.