HP emerges intact from Washington 29 Sep 2006 With HP's reputation at stake, its general counsel quit, its former chairman looked weak and several others refused to testify to Congress. But chief executive Mark Hurd performed well under the political krieg lights. Shareholders look safe.
Amaranth teaches lesson in liquidity 29 Sep 2006 LTCM taught investors to watch out for leverage and blackbox trading systems. Amaranth s fiasco shines a spotlight on lockup provisions. In the wake of Amaranth s $6bn blowup, investors are almost certain to demand looser lockups and redemption provisions of the industry.
Gazprom bear hug on BP-TNK is not all bad news 29 Sep 2006 The Russian gas giant has for the first time openly said it would like to buy out BP s local partners at TNK. That is mixed news. Gazprom could unlock BP s stalled Russian projects. But it might also leave local rivals jealous. Rosneft might want a slice of TNK too.
Tribune should avoid private-equity raid 29 Sep 2006 Selling assets like the LA Times and Chicago Tribune piece by piece could unlock substantial value up to $42 a share. A buyout might fetch just $38. The board should capture the difference by liquidating the company in an orderly fashion.
A long wait for Dow 36k 29 Sep 2006 After 6.5 years, the Dow Jones has regained its 2000 peak. But it s still a long way from the level predicted by bull market boosters. Another 50 years will likely pass before the Dow reaches 36,000. By then few on Wall Street will remember this ridiculous thesis.
Merck investors assume Vioxx wounds skin deep 29 Sep 2006 The drug group s stock has largely recouped its losses since the drug s recall. In fact, Merck now trades at a premium to rival Pfizer This makes little sense. Merck s earnings growth should be stagnant over the next few years. And Vioxx s legal costs could be staggering.
Standard Chartered pays up for bet on Taiwan revival 29 Sep 2006 The bank is bulking up in Taiwan with the $1.2bn purchase of Hsinchu. Yet it has just taken big writeoffs on its other Taiwanese investment The deal has strategic logic, and should release synergies. But given Taiwan s bad debt problems, Standard looks to be paying a full price.
Bollore needs to sort out Havas 29 Sep 2006 The entrepreneur effectively took control without paying a premium. That was smart. But Bollore hasn't subsequently delivered the goods. One reason may be that Bollore has spent too much time trying to push Havas together with Aegis. He should focus on sorting out Havas first.
Fannie and Freddie face bleak future 29 Sep 2006 At the end of this housing boom, other institutions provided the easy money while Fannie and Freddie had to sell off mortgages. But if the US housing market crashes the GSEs will have to reverse course, becoming major mortgage buyers. That could hurt shareholders.
Stakebuilders shouldn’t use CFDs 28 Sep 2006 While it's clearly wrong for investors to use derivatives to build stakes, it s impractical to force all CFD holders to disclose positions. The information would overload the system. A better idea would be to only punish those who convert undisclosed CFDs into stakes.
Activism ain’t easy 28 Sep 2006 Hedge fund managers like Carl Icahn and Dan Loeb make activist investing look easy and even sort of fun. But it's neither. Although the tactics look simple, activism is a lot harder than it seems. Newcomers may learn that lesson the hard way.
How do you finance Europe’s biggest cash bid? 28 Sep 2006 Quite easily. E.on can raise most of the E37bn cash it needs to take over Endesa by piling on more debt and still keep a singleA rating. The Germans should be able to make up the balance with a rights issue, asset sales and, possibly, hybrid capital.
Nepotism alive and well at Anheuser-Busch 28 Sep 2006 The giant brewer named 42year old family scion August Busch IV as its new chief executive. The stock slid 2%. Given Bud s challenges it s disappointing the board caved in to the desires of a 3% shareholder. At least it split the chairman s role.
Spanish firms’ voting caps should be scrapped 28 Sep 2006 Talk that La Caixa might buy an Endesa stake, however erroneous, has focused attention on a bylaw that may its deny investors a juicy bid. Endesa s voting cap is a silly rule that should be scrapped. Such caps are supposed to protect minorities. The opposite is true.
Wall Street’s lobbyist drops bullish stance 28 Sep 2006 The Securities Industry Association has been exceptionally upbeat about brokerage earnings for years. Now it s abruptly turning bearish. The Street s political body is predicting a 22% drop in industry profits next year while analysts forecast gains. Who is right?
Sonaecom pulls off Portugal Telecom regulatory coup 28 Sep 2006 Gaining the green light to merge the groups mobile networks may be outrageous from a consumer standpoint. But it is good for shareholders. Sonaecom now looks in pole position to succeed with its E11bn hostile offer. But it may have to increase its lowball price.
China needs new investment strategy 28 Sep 2006 The portfolio is now too big for comfort. A smaller trade surplus is the best idea. But while waiting, China should diversify its portfolio. The country's trillion dollars are mostly placed in US government debt. Although that keeps a lid on the renminbi, the returns are dreadful.
Ghosn tries to salvage GM alliance talks 27 Sep 2006 The Renault CEO is meeting counterpart Rick Wagoner in Paris today to discuss a possible costcutting alliance. But GM is still reluctant. The French are trying to tell GM what would be good for its own shareholders. This may be a sign that the talks will lead nowhere.
Apax and Texas Pacific cash in on Greek mobile 27 Sep 2006 Now it isn t just gearing at work. Apax and TPG are also reaping the benefits of defying fashion in buying a lowranked mobile operator. The buyout firms should make a killing on TIM Hellas. If it goes for the E3.5bn they'll quadruple their cash in 18 months.
US looks too much like a troubled hedge fund 27 Sep 2006 The country has geared up its foreign investments with debt. So much so that the carry has turned negative. Treasury secretary Paulson may know how to run a hedge fund. But it won t be easy to turn this one around.
GM-Renault-Nissan talks will be tough 27 Sep 2006 The three companies have agreed to keep on studying a possible purchasing alliance. But they are starting from very different places. They have totally different views of the money, the risks and each other.
Credit Suisse poised to beef up in Russia 27 Sep 2006 Before the rouble crisis, Credit Suisse ruled the roost in Moscow. Now it lags rivals like UBS and others that weathered the bad years. The investment bank is hiring KyriakosSaad, a former JPMorgan banker with strong Russian connections, to regain traction.
ABN stuck in another Italian bog 27 Sep 2006 The Dutch bank s plan for a friendly E16bn takeover of Capitalia has been scuppered by a chairman who doesn t want to lose his job. The obvious thing now would be to go hostile. But after last year s bruising Antonveneta battle, the Dutch may not have the bottle.
PPR mulls further focus on luxury 27 Sep 2006 Selling the Fnac retail unit for E2bnplus would continue the French group s transformation into a pure play luxury goods business. In theory that should eliminate PPR s conglomerate discount. The one drag is its growing warchest. PPR should consider a return of capital.
Another private equity IPO hits the skids 27 Sep 2006 First Refco, then Burger King. Now Warner Chilcott has seen its stock crash days after floating. This is starting to look like a pattern. Who s to blame? The sponsors have certainly been greedy. But underwriters like Goldman also need to exercise better quality control.
E.on forced to raise Endesa bid by nearly 40% 27 Sep 2006 The German utility couldn't sit by and allow Acciona to snap up Endesa shares as that could have torpedoed its own bid. By raising aggressively, E.on may knock out the competition. But the move looks valuedestructive.
Acciona launches shock dusk raid on Endesa 26 Sep 2006 The Spanish construction firm has bought 10% of Spain s power company, and says it might go up to 25% bankrolled by Santander. The latest twist in the Endesa bid battle raises the stakes dramatically for E.on, the German bidder. It all points to a Spanish plot.
Mike Bloomberg takes on the City 26 Sep 2006 The LSE s success at besting the Big Board and Nasdaq for foreign listings has New York s mayor worried. Now he s starting to fight back. Hiring a PR firm may help him lobby Washington for regulatory relief. But he can t do much else to counter London s many attractions.
Bayer could be next drug maker for consolidation 26 Sep 2006 Midcap drug makers face an ugly future. So Serono, Altana and Schwarz Pharma have all pulled the ripcord in the past month. Competitors Bayer, Novo Nordisk and Akzo Noble would seem like natural followers. But the devil is in the details.
HP shareholders brace for Hurd on the Hill 26 Sep 2006 The computer group s chief executive faces a political grilling over HP s inappropriate snooping. To avoid turning this governance fiasco into an electionfueled nightmare, Hurd must show genuine contrition.