Skype IPO may add dose of healthy hype to Valley 9 Aug 2010 The web firm s $100 mln float should be hot. There have been several tech offerings this year, but investor reception has been uneven. A bit of justified excitement over Skype s growth and its backers gains is just what Silicon Valley s capitalists and entrepreneurs need.
Oil’s Cassandra dies but his questions live on 9 Aug 2010 Peak Oil has lost its leading prophet with the death of Houston banker Matt Simmons. Since many nations refuse to share oil data it may be years before his warnings of ebbing production are vindicated or discredited. But his crusade for more data is as urgent as ever.
Hurd scandal gives HP chance for governance reboot 9 Aug 2010 Losing Chairman and CEO Mark Hurd to sexual harassment and expense fiddling charges will hurt, after all the good he did for the tech company. Finding a replacement with both operational and strategic expertise won't be easy. HP should use the moment to split the two roles.
BHP-Rio JV may need big remedies to get through 9 Aug 2010 The mining industry is facing unprecedented scrutiny. That means BHP and Rio may find it harder to get their Aussie iron ore tieup cleared than if they'd tried two years ago. Regulators could potentially demand the sale of assets worth $8 bln but that needn't kill the deal.
Trading gains, not losses, remain Goldman’s forte 9 Aug 2010 Like its rivals, the Wall Street firm s pristine Q1 showing gave way to several days of losses in the second quarter. What makes Goldman stand out, though, is the average $260 mln it made on its bumper trading days, ensuring it kept well ahead of the competition.
ICBC faces possible minority tussle over HK unit 9 Aug 2010 The giant Chinese bank wants to buy out the minorities in its Hong Kong subsidiary. The likely $1.3 bln deal would allow ICBC to grow its overseas business fast. But the logic of the transaction, and ICBC's deep pockets, may stiffen the minorities' resolve to get a high price.
Caution may eventually catch up with hedge funds 9 Aug 2010 Timidity is seldom rewarded in the highoctane corner of the investment community. GLG's lackluster results combined with broader hedge fund underperformance in July suggest managers may be losing some swagger. Choppy markets are hard to navigate but clients could lose patience.
U.S. unemployment problem looking more structural 6 Aug 2010 Laidoff census workers were the main cause of the July tumble. But the private sector added just 71,000 jobs, suggesting struggles to absorb new workforce participants. New hiring is seriously lagging that of previous recoveries. A new market inefficiency could be forming.
RBS stuck as tortoise to Lloyds’ hare 6 Aug 2010 The UK bank's interim figures contained no nasties, but few happy surprises like those from rival statebacked lender Lloyds earlier this week. Bad debts are falling less quickly than at Lloyds, and RBS isn't so geared to the recovery in UK retail banking. It could lag for years.
Obama adviser change may reveal deficit strategy 6 Aug 2010 The short, strange Washington career of Christina Romer is over. The departing Obama economic aide began loved by conservatives and ended cheered by liberals. Whoever her replacement turns out to be could hint at just how debt averse the president will be going forward.
Wheat panic raises spectre of food crisis 6 Aug 2010 Prices are up 90 pct since June on fears that Russia's drought will create shortages. Prime Minister Putin is adding to markets' fear by banning exports. But global wheat stocks remain abundant. Even so, the ripple effects of the current alarm will hit the developing world hard.
Rejection of Fed nominee sets a bad precedent 6 Aug 2010 The central bank has as much impact on the country as the Supreme Court. Yet its candidates are generally treated far more gingerly by Congress. The Senate's blocking of Peter Diamond's nomination hints this may be changing. It bodes poorly for the future of Fed independence.
NXP’s market thud doesn’t bode well for rival IPO 6 Aug 2010 The chip company's private equity backers had reasons to take a haircut in their float of the debtladen chip company. But choppy markets made it worse than expected. The investor reception may put a kink in other potential megafloats especially that of rival Freescale.
India hosts Wall Street’s race to fee bottom 6 Aug 2010 Goldman Sachs will share a mere $18 for selling shares of an Indian power firm. Rivals aren't faring much better. Tiny fees for the recent Banco do Brasil deal and GM's upcoming IPO look bountiful by comparison. Yet the payoff for these Indian lossleaders may be some ways off.
Private equity could get lucky with RBS WorldPay 6 Aug 2010 The payments processing arm of UK lender RBS looks like a dream buyout. It comes out of a forced seller, revenue is probably close to bottoming, and the business can be leveraged into a recovery. But restoring capex spend could dampen returns for likely buyers Advent and Bain.
UK insurance giants are hard to beat – or emulate 6 Aug 2010 Aviva shares soared this week on strong interim figures showing how advantageous it is to have size in the insurance sector. That would seem to vindicate attempts by consolidators like Clive Cowdery to build a new scale player. But Aviva's resurgence isn't just about being big.
No exit for ECB as zone basks in summer calm 5 Aug 2010 JeanClaude Trichet, president of Europe s central bank, can afford to be in a summer mood. The euro zone is calm; the euro has rallied; money markets and growth have improved. But the ECB isn t yet in a position to exit from the loose monetary policies prompted by the crisis.
I-bank reliance shows Barclays’ strategic dilemma 5 Aug 2010 The UK lender's profits surged, but from falling losses more than growing revenues. Barclays Capital was again the star, providing 80 pct of profits. But as long as Barclays relies so heavily on volatile trading revenue, investors will keep it trading at a discount to peers.
BP snap-back could have further to run 5 Aug 2010 Obama has softened his tone, the environmental damage is less than feared, the spill has been quantified and the well is almost permanently plugged. There's probably more upside in the shares so long as BP doesn't get hit for gross negligence.
Volcker Rule won’t so quickly squelch house bets 5 Aug 2010 Goldman Sachs looks set to restructure or spin off private equity and prop trading. But that won't put an end to such activities. The financial reform language is vague and leaves ample room for Goldman and others to put plenty of their own capital at risk.
China property crackdown stokes hard-landing worry 5 Aug 2010 Beijing seems serious about curbing property excesses. The banking regulator ordered banks to test the impact of a 50 percent fall in house prices. A sharp drop in price will be hurtful, unless Beijing can pull off a lowcost housing scheme to keep construction going.
Private equity not prop is Goldman’s main challenge 5 Aug 2010 The Wall Street firm needs a solution for its prop trading business to conform with the Volcker Rule. But that's now small beer. The bigger deal is private equity. The answer will probably be to reinvent that business as an internal Blackstone, pulling in big fees from clients.
U.S. mortgage write-off idea deserves brush-off 5 Aug 2010 The White House may soon direct Fannie Mae and Freddie Mac to erase billions in underwater U.S. mortgage debt at least so goes the whitehot rumor searing Washington and Wall Street. If it happened, politics would be the winner and prudence and credibility the losers.
Becoming Big Gas will cost Big Oil 5 Aug 2010 Oil companies are becoming less liquid but not in a financial sense. The industry is drifting towards gas, with the fuel now so plentiful. The natural gas glut should spell lower returns for shareholders and hand an advantage to the oiliest majors, especially Occidental.
UK soccer clubs can play a disgraceful fiscal foul 5 Aug 2010 The British tax authorities are playing hardball against the national Football Association. Portsmouth, a bankrupt club, is trying to come out of administration. But scandalous FA rules mean overdue tax won't be paid before other claims. The taxman is livid, and quite right too.
New York can’t blame recession for spending habit 5 Aug 2010 With Wall Street bracing its tax base, New York is further from default than other states. But its spending has increased three times faster than GDP over the past decade. If the state can't start cutting back and keeps trying to soak the rich, its golden geese may start to fly.
StanChart’s star loses some dazzle 4 Aug 2010 The Asiafocused bank notched up another record result, thanks to lower loan losses and success in its push into investment banking. But the shares have reacted badly. With Western peers finding favour again, StanChart's status as crisis winner is counting for less.
U.S. housing finance can work without government 4 Aug 2010 It's close to an article of faith that Uncle Sam's guarantee is needed to ensure mortgage availability. But today's system absolves lenders of responsibility, while the UK example shows the private sector can do the job. The goal should be for D.C. to exit the home loan business.
Lloyds’ comeback could have sting in the tail 4 Aug 2010 The UK bank is making a habit of beating its own targets and market forecasts. Bad debts are falling fast and Lloyds is beginning to exploit its dominant UK retail market position. The snag is this could make the coalition's banking commission more inclined to break it up.
GM IPO should borrow from European privatizations 4 Aug 2010 These used incentives and guarantees to persuade the public to buy firms denationalized in the 1980s and '90s. Adopting such tactics would allow the U.S. to sell a big chunk of its stake in GM to taxpayers and avoid potential charges of favoring Wall Street at their expense.