Citi and UBS won’t leave B&B fiasco behind that fast 15 Aug 2008 Sure, the underwriters for the struggling UK mortgage lender have got the rights issue away. A cut price, the regulator s support and a relatively high 28% takeup mean the banks aren t on the hook for much money. But reputations still matter and there the pain will linger.
Heinz-Campbell would make super sense 14 Aug 2008 Both food companies futures blend similar ingredients: slow topline growth and higher input prices. Merging won t sell more ketchup or tomato soup, but it could squeeze out juicy synergies worth $4bn or more to shareholders today.
US foreclosure surge piles on more woes for GSEs 14 Aug 2008 The number of houses in receivership is rising fast, and those held by Fannie and Freddie have doubled in the past year meaning even betterquality owners are defaulting. That s a bad omen for the market and for the companies, which must pay a bundle to maintain the properties.
Do bank LBO portfolios need a haircut? 14 Aug 2008 They ve already written down leveraged loans but what about equity? Declines in public equity values, and Goldman s purchase of ABN Amro s buyout portfolio at a 15% discount, raise the question. But investors shouldn t fret quite yet the valuations have more wiggle room.
Battlefield Georgia serves Russia’s energy goals 14 Aug 2008 Russian planes did try to bomb the BakuTbilisiCeyhan pipeline, the Wall Street Journal has found. By making Georgia unsafe, Moscow wants to make sure Western countries will think twice before trying to bypass Russia for their energy supplies.
World economic mess makes policy direction hard 14 Aug 2008 Accelerating inflation, as seen in the US CPI, and stagnation in rich countries make central bankers jobs impossible. It s their own fault. Real interest rates are mostly negative, while many countries are dealing with collapsing asset bubbles. Sorting this out will take years.
BA-AA alliance should finally take flight 14 Aug 2008 Regulators have twice turned down proposals by the two carriers to work together. But in the world of Open Skies and expensive fuel, its hard to see the third approach with Spain's Iberia thrown in being rejected. The alliance would only be in third place on the Atlantic.
UBS makeover could give it a Credit Suisse look 14 Aug 2008 Sure, abandoning the onebank model takes UBS in the opposite direction of its Swiss archrival. But its revised approach to risk, governance and pay will make the two look more alike. As Credit Suisse grows more integrated and UBS less so, they may both find a similar balance.
British Land suffers from economy – and gloom 14 Aug 2008 The UK real estate firms exposure to the City of London where rents are now falling may justify it trading at a hefty discount to its assets. But the company's shares are also suffering from the bearish assumption that falling rents will be more than fully reflected in prices.
US trade problem not solved yet 13 Aug 2008 The deficit has shrunk from 6.1% to 4.9% of GDP since 2005. It fell in the most recent month, despite a soaring oil price. The falling dollar is doing what it is supposed to. But the currency gains may be vanishing. The next reductions are likely to be much harder.
CVS Caremark acquisition adds more to overloaded plate 13 Aug 2008 The drugstore chain has outperformed rivals since it bought benefits company Caremark for a song. But it hasn t definitively proven the merits of the combination. Buying rival Longs Drugs could delay this.
Citi: too big to fail, or to succeed 12 Aug 2008 From tainted research a decade ago to auctionrate notes today, the giant US bank has been central to every recent crisis. Perhaps now the Fed and Citi shareholders have a common interest in dismembering the colossus, says Rob Cox.
Waste shareholders shouldn’t encourage trashy deal 12 Aug 2008 The largest US rubbish collector increased its bid for rival Republic Services by 9% to $37 a share, or $8.2bn. At least one large shareholder objects to the deal, which doesn't look compelling. Shareholders might want to encourage the board to back off.
Tesco dips a tentative toe into the Indian market 12 Aug 2008 Tesco has finally announced a deal to open shop in India. That s good news for a retailer with global ambitions. The UK supermarket giant needs to be in India s $350bn market. But it s a longterm game. More important for now is Tesco s quiet progress in countries such as Turkey.
UBS future looks better as past gets worse 12 Aug 2008 The Swiss bank admitted defeat on its onebank strategy, paved the way to exit investment banking and further pared the balance sheet. But it was hurt by legal woes, credit losses and private bank withdrawals. UBS is running a good race. If only it could pull away from history.
Sprint’s debt forces it to make unpleasant choices 12 Aug 2008 The phone company was forced to pull a $3bn convert after its shares took a dive. Unfortunately, it is still bleeding customers and its debt covenants are uncomfortably tight. The company needs more capital, and pronto.
UBS shows right sort of boldness in board choices 12 Aug 2008 The troubled bank has managed to find some fine talent to beef up its previously ineffective board. Hedge fund manager RainerMarc Frey might seem an odd choice for a bank scaling back risky bets. But financial expertise and independent thought are just what more banks need.
Russia’s foray dims business prospects in neighbours 12 Aug 2008 Its military success in Georgia may cause near abroad states to pay greater political and economic mind, and become less welcoming to Western business and investment. Only Ukraine as long as its proWestern government lasts and the Baltic states may be exceptions.
AOL-Time Warner: the best deal ever 12 Aug 2008 Sure, the 2000 merger zapped hundreds of billions of dollars of value. But John Malone s plan to swap his $1.6bn stake in Time Warner for AOL s dialup business begs a rethinking of the past. It s now clear former AOL boss Steve Case gave his shareholders the steal of a lifetime.
West End real estate slide is test case for UK 12 Aug 2008 London s West End should have the safest commercial property in the country. But even here a double dip is under way falling rents are now joining falling prices caused by the recent property boom unwinding. How bad it gets will be a pointer for the rest of the UK.
Wagoner should park his optimistic chatter 12 Aug 2008 The embattled General Motors boss says the carmaker may, operationally, be over the worst. But he s been upbeat in the past, and that was before the entire industry was suffering. Wagoner should have learned from this year s financial Pollyannas and kept schtum.
Conti squares up to imaginary enemy 12 Aug 2008 The German tyremaker can t easily squash Schaeffler Group s hostile E11.5bn takeover. Maybe it doesn t have to. For Schaeffler, a full takeover could easily turn into an own goal. Both sides have good reason to call a truce and it needn't be a bad thing for shareholders.
Russian attacks on Georgia may de-flatten world 11 Aug 2008 In the flat world model of globalisation, trade is free and disputes are settled peacefully. Russia s invasion of Georgia could damage this model, along with European energy security. The best response? Higher interest rates would cut down the oil price and Russia s swagger.
Could iPhone software be a cash cow for Apple? 11 Aug 2008 Apple sold $30m worth of iPhone applications in their first month. But it only gets a 30% cut to cover costs. That s smart it needs to maximise iPhone sales for now. Once enough users are locked in, the software could become its next big money maker.
Fortress trading star’s bonanza may not help investors 11 Aug 2008 The hedge fund has given top trader Adam Levinson a $300m options package. That aligns his interests more closely with shareholders. But his pay is also now tied less directly to his fund s performance. This highlights a conflict between fund managers and limited partners.
China’s manufacturing primacy holds threats for US 11 Aug 2008 China s emergence as the world s leading manufacturer is a natural development. But it gives the US two worries. It is losing some of the highend research capabilities that accompany mass manufacturing, and it may yet lose all domestic production of some key items.
Put options may not be smoking gun in Bear’s collapse 11 Aug 2008 Yes, regulators should take a close look at who piled into options that would pay off if the brokerage failed. But there are reasons for buying them other than as part of a conspiracy to drive it out of business.
Georgia crisis may not stop oil price drop 11 Aug 2008 How much difference a month makes. In July, crude was about to cross $150 a barrel. Then a Caucasus war would have strewn panic in the market. Now, with oil at $115 and sliding, war has only caused a minor tremor. Unless things change, the bull case for oil is in serious trouble.
Deutsche Bank clambers out of $10bn property hole 8 Aug 2008 Two huge US loans have gone bad for the German bank. It looks set to emerge quickly from the Macklowe mess in Manhattan. A Las Vegas development may yet pay off, although Deutsche could get stuck holding a bad hand. Worse, its ability to read borrowers and risk looks weak.
Richemont hedges its luxury bets 8 Aug 2008 The Swiss luxurytobacco conglomerate has revealed a complex plan to divide its businesses. It wants to stop the pricey trinkets from being stained by a tobacco discount. But the founding family will set up a new diversified fund. Its faith in luxury goods might be dwindling.