Exxon’s record $44bn profit makes tempting target 30 Jan 2009 During a financial crisis when the US government is strapped for cash, it s not hard to imagine windfall and other taxes springing into lawmakers' minds. But look again 2008 may have been great, but Exxon s business is in secular decline.
Dell takes another futile bite at Apple 30 Jan 2009 The PC maker has long been Apple's mirror image producing bland, cheap computers rather than premiumpriced clever ones. Dell's efforts to make an iPhone clone will probably be as unsuccessful as its attempt to muscle into iPod s turf in digital music players.
US economy faces long slow rebalancing 30 Jan 2009 GDP fell 3.8%, less than expected, but the details were disturbing. Trade and savings imbalances were only partly corrected, while federal spending and inventory buildup were strong. Nominal GDP fell sharply, suggesting the US economy s biggest problem is its debt overhang.
BNP-Fortis saga nears acceptable compromise 30 Jan 2009 The botched sale sank Belgium s government and infuriated Fortis shareholders. A new proposal allows smarting investors to keep most of their insurance arm and reduce exposure to toxic assets. A weakened BNP will be happy to save cash and get Fortis s retail arm.
Roche offers Genentech holders $42bn cash therapy 30 Jan 2009 The Swiss drugs group has gone hostile, and cut the price, to land the 44% of Genentech it doesn t own. Fast cash even a little less of it might tempt minorities. But Roche s aggression suggests a strong desire to get the deal done. Holders might just want to play it cool.
Roche offers Genentech holders $42bn cash therapy 30 Jan 2009 The Swiss drugs group has gone hostile, and cut the price, to land the 44% of Genentech it doesn t own. Fast cash even a little less of it might tempt minorities. But Roche s aggression suggests a strong desire to get the deal done. Holders might just want to play it cool.
Osmium’s golden gizmo plays to currency fears 29 Jan 2009 The hedge fund is letting investors have their assets denominated in gold, while also offering exposure to the performance of a special situations fund. Hedgefund risk twinned with gold security could prove popular. But it also reflects unease about the dollar, pound and euro.
RBS boardroom undergoes overdue revolution 29 Jan 2009 During the gogo years, shares in the UK bank suffered from fears that a parochial board couldn t rein in boss Fred Goodwin s ambitions to build a global empire. The board is finally becoming more diverse. But only now the bank has beaten a forced retreat.
What’s the difference between Citi, RBS and BofA? 29 Jan 2009 All three banks have lost billions in the credit crisis and gone cap in hand to the authorities for aid. But Citi and RBS have held executives accountable and even started to shake up their boards. Bank of America, by contrast, has done nothing. That surely has to change.
The UK falls behind, and may stay behind 29 Jan 2009 The IMF's view that the UK will fare worst this year in the global downturn is less troubling than the underlying trends, highlighted by the Institute for Fiscal Studies, which suggest the UK will spend years grappling with much higher public debt.
Xstrata jumps queue with $6bn rights issue 29 Jan 2009 The once acquisitive Xstrata has too much debt for these times. It is pricing its issue at a hefty 66% discount to get it away. And its largest shareholder, metals trader Glencore, is providing assets rather than cash. As rival Rio mulls its options, the cash rush has begun.
BofA board lets shareholders down 29 Jan 2009 There were plenty of justifications for ditching CEO Ken Lewis: valuedestroying deals, inept due diligence and plain old lousy management. There are also potential replacements. Instead directors left him at the helm. If investors want Lewis out, they must do it themselves.
Obama should tread carefully around bonuses 29 Jan 2009 The US president is castigating banks that received government funds yet paid bonuses. He s right that many payouts are excessive and it makes great political theatre. But policymakers should use caution when dictating pay issues it could come back to bite them.
Shell boldly raises divi as cash pressures build 29 Jan 2009 Falling crude prices led to a sharp drop in the oil major s quarterly net profit. Yet Shell is upping its dividend, while keeping capex flat, which means debt will rise. Managing cash and costs is the biggest challenge facing CEO designate Peter Voser this year.
Death threats and saliva challenge blog business model 28 Jan 2009 The founder of influential Silicon Valley blog Techcrunch is temporarily giving up after being spat on in Munich and receiving death threats. That's understandable. But this highlights the keyman risk that could keep this emerging medium from hitting the big time.
BBVA distances itself from Santander 28 Jan 2009 The two Spanish banks have diverged in their international strategies. Now BBVA has decided to cut its dividend, while Santander opted for a massive rights issue. The BBVA approach to capital looks more sensible, but may not be enough to cope with storms in Mexico and Spain.
Savings are crucial for emerging markets 28 Jan 2009 The IIF forecasts net private capital inflows to emerging markets this year will be just 18% of the 2007 level. Countries with big debt loads could face default unless they also have huge reserves. But China and those that generate capital domestically should be in better shape.
Is Wells Fargo calling the bottom? 28 Jan 2009 Not quite. Keeping the dividend, eschewing more Tarp capital and touting market share gains look punchy amid US banking carnage. But bosses seem to have a better handle on Wachovia than, say, Lloyds did on HBOS. It ll hurt if they re wrong, but they still have room to manoeuvre.
Germany’s car plan leaves UK well behind 28 Jan 2009 The UK s loan guarantee plan for the car industry looks poor compared to Germany s buyer incentive scheme. Germany has encouraged cautious consumers to spend, bolstering an industry that is much bigger than the UK s and achieving immediate environmental benefits.
Banks should learn that ratchets are toxic 28 Jan 2009 The price reset mechanism protecting investors in Barclays' recent capitalraising isn t as onerous as those in earlier US bank deals. But ratchets discourage future investment, cutting off access to crucial capital in a crisis. Banks, in particular, should steer clear.
BSkyB steps outside the cycle 28 Jan 2009 Home for the recession? Watch more TV. That formula appears to be working for the British payTV operator. In a dismal economy, Sky is performing well on all counts. And as ever, it s a master at public relations Sky s clever new highdefinition TV offer will create 1,000 jobs.
Santander’s Madoff offer looks stingy 28 Jan 2009 The Spanish bank is trying to do right by those it may have shepherded into the alleged fraud. But Santander wants clients who thought they had roughly E1.7bn to make do with preferred shares it values at E500m. Some discount on imaginary gains is fair, but this one looks steep.
Unicredit’s boss deserves reprieve 28 Jan 2009 Alessandro Profumo has been the victim of chitchat that he s on the way out. But an imminent reshuffle of the Italian bank s board should buttress his position. And rightly so. Profumo may have made mistakes, but he s not doing too badly against his international peer group.
RBS investors should have acted, not whispered 28 Jan 2009 One of the UK bank s top investors said it privately criticised RBS nonexecutives for not reining in former boss Sir Fred Goodwin. Yet shareholders kowtowed over the reckless ABN Amro deal and subsequent rights issue. It is late in the day to complain about powerlessness.
Wall Street starts to feel the sting of bankruptcies 27 Jan 2009 Until now, most bank writedowns were the result of marking stillfunctioning loans to market rather than borrowers going belly up. Goldman s revelation of $850m of losses on Lyondell loans suggests the next wave of financial difficulty actual corporate defaults is rolling in.
Japan stimulus threatens worse result than 1990s 27 Jan 2009 Japan s plan to buy shares in struggling companies will perpetuate inefficiency and prevent Schumpeterian renewal. Its successive stimulus packages increase its large deficit and huge debt. It is returning to the policy mistakes of the 1990s in a far less favourable environment.
Buy American is bad for US business 27 Jan 2009 Domestic woes and simplistic nationalism have put some protectionist measures into the latest US stimulus bill. If passed, it would be a dangerous backwards move as the WTO, and many US companies, recognise. Obama would lose foreign fans and US companies would foreign sales.
Hedge fund M&A gets more creative 27 Jan 2009 Stark & Roth is buying Deephaven s roughly $2bn of assets for $7.3m a relative pittance, reflecting disarray in the fund industry. But Stark will pay more, up to nearly $45m altogether, if investors stay put and returns materialise. Such earnouts could feature in other deals.
Lehman makes mark on Nomura – in red ink 27 Jan 2009 The Japanese bank lost $3.8bn in the last quarter of 2008. The Lehman operations acquired in September were the main culprit, although market volatility, Iceland and Madoff didn t help. It is an inauspicious start to the Lehman deal. Nomura has yet to prove it bagged a bargain.
Pfizer’s monster loan adds to down-market toolbox 27 Jan 2009 The drug company, Wyeth and their bankers wrestled a clever structure that could benefit all parties. The $22.5bn loan employs a lenderfriendly provision to lure banks into the market. But this trick will only work for companies sporting topnotch credit ratings.