Buffett inadvertently nails it evoking Salomon 30 Apr 2011 The Oracle of Omaha compared David Sokol's Lubrizol dealing to the scandal that rocked the Wall Street firm he partly owned 20 years ago. He described both as inexcusable and inexplicable. The link Buffett missed is that rogue trading at Salomon Bros exposed poor controls.
Total pays luminous price for SunPower control 29 Apr 2011 The French energy major is paying $1.4 bln for 60 pct of the U.S. solar business a 46 pct premium. But it's more than a cute PR ploy to placate green critics. Though Total could have gone after bigger fish, with nukes in disarray it makes sense to expand with the sun.
HK’s first yuan IPO sets poor precedent 29 Apr 2011 Li KaShing s real estate trust Hui Xian dropped 11 pct on its debut. Jittery markets and currency volatility didn t help, but aggressive pricing looks a bigger factor. It is bad news for underwriters HSBC and Bank of China, whose hot new investment idea now looks like a flop.
Crippled class suits may put new watchdog to test 29 Apr 2011 It's a joyful spring for corporate America after the Supreme Court ruled companies can block customers and employees from suing en masse. But as directors celebrate, consumer advocates mobilize to overturn the decision. Elizabeth Warren's consumer bureau could be their best bet.
Morocco outrage raises twin risks 29 Apr 2011 King Mohammed was navigating the Arab Spring fairly deftly. But that could change if a drop in tourism worsens already mounting fiscal and trade deficits, and any security crackdown hampers political reform.
A royal wedding would do U.S. economy some good 29 Apr 2011 The last two toptier royal weddings provided lifts to consumer and business spirits that may have helped to pull Britain out of recessions and produced some growth. America could use a similar tonic it's certainly cheaper and less damaging than fiscal and monetary stimulus.
BlackBerry maker starts to feel serious squeeze 29 Apr 2011 Research In Motion is hemorrhaging market share and just warned product delays are hurting sales. The pressure is showing: its coCEO recently stormed off a TV interview. Flailing RIM needs to compose itself if a new tablet and operating system are to keep the firm relevant.
Deutsche needs to keep delivering capital lift 28 Apr 2011 Strong trading and a surprisingly buoyant retail bank boosted the German lender's capital ratios in the first quarter. But Deutsche still has a long way to go to prepare for new Basel III rules. It will need multiple repeat performances if it is to avoid issuing more equity.
Counterpoint: UK monarchy blunts meritocracy 28 Apr 2011 The economic cost of the royal family is greater than the money needed for its upkeep. The Windsors sit at the pinnacle of the vestiges of a feudal system, which includes the House of Lords. This distorts incentives, limits opportunities and takes the edge off competitiveness.
Buffett bungle restores a bit of M&A banker cred 28 Apr 2011 Bankers routinely seek credit for transactions on which they do squat. But Berkshire's David Sokol understated Citi's role in arranging the Lubrizol takeover. Given his exboss's views on bankers, it's the last place where Wall Street could have expected inadvertent image help.
Security slip is latest setback to Sony comeback 28 Apr 2011 Japan's electronics giant faces lawsuits and red faces after PlayStation data was hacked. But quakerelated production snafus and the global battle over smartphones and tablets pose larger challenges. The breach says less about Sony and more about risks to all networked products.
Everything pays off for Exxon except XTO 28 Apr 2011 Rising commodity prices helped the oil giant boost Q1 earnings by 69 pct. Only U.S. gas was a laggard a reminder the figures would have glittered still brighter without Exxon's $31 bln gamble on XTO. But investors shouldn't forget the company's long bets have paid off before.
Shell has got to the right place at the right time 28 Apr 2011 The AngloDutch hydrocarbon major isn't bogged down like archrival BP. Nor is it losing barrels in Libya like Eni. And its big bet on LNG is paying off. Shell is also growing faster than rivals thanks to hightech projects. Its challenge is to improve profitability.
Nomura wobbles its way to big-league banking 28 Apr 2011 Japan's earthquake only partly explains why the financial group failed to wow in the last quarter. Investment bank profit was propped up by asset sales, and despite much effort its U.S. dealmaking looks thin. With recent management changes, Nomura should be doing better.
Danisco compromise may be within easy reach 28 Apr 2011 DuPont's $6 billion bid for the Danish food ingredients maker is facing opposition from investors including hedge fund Elliott Associates. There are risks to all sides if the deal falls apart, but a small increase in the U.S. group's offer could satisfy each of the protagonists.
China needs an SWF overhaul 28 Apr 2011 Its $300 billion sovereign fund wants a topup. But it would be better to set up new funds for China's swelling foreign reserves with separate boxes for natural resources, or politically backed foreign investment. Transparency should reduce controversy, and improve returns.
Time for Buffett to consider a Berkshire breakup 28 Apr 2011 The Sokol affair has raised serious doubts about the billionaire's ability to anoint a successor to take his $200 bln sprawl of industrial and financial assets into a bright future. Dismantling into manageable pieces is a reasonable alternative. It might even create value.
U.S. GDP data starts to spell stagflation 28 Apr 2011 The economy slowed, with firstquarter output increasing just 1.8 pct despite additional fiscal stimulus in December. At the same time, a closely watched inflation index rose 3.8 pct. If the trends aren't temporary and oil prices don't retreat, the Fed may find itself scrambling.
Britain’s royal family is an affordable indulgence 28 Apr 2011 If the UK stopped funding the clan destined to be led by William Windsor and Catherine Middleton, it would be freed of a 1.1 billion pound liability. For some, it's a burden the cashstrapped state could do without. Yet the entertainment value exceeds the cost by a royal mile.
Exelon and Constellation try for deal redemption 28 Apr 2011 Both U.S. power companies have stumbled in respective attempts at M&A. But their proposed $7.9 bln tieup looks more promising. Low natural gas prices, an improved regulatory landscape and some political carrots should help. But they may yet need to cede more of the synergies.
BP’s turnaround is proving painfully slow 27 Apr 2011 Rising oil prices in the first quarter weren't enough to offset rising U.S. Gulf cleanup costs, higher taxes and lost production due to divestments. Any resolution to its Russian fiasco looks costly. Without more clarity, BP's shares will continue to languish.
Barclays’ costly Protium exit leaves sour taste 27 Apr 2011 The UK bank has reversed a deal that limited its exposure to market fluctuations on $12.3 bln of toxic assets. But to do so it has paid $83 mln to a group of exemployees for just 18 months' work. The exit revives questions about why Barclays ever agreed to the transaction.
Barclays struggles against multiple headwinds 27 Apr 2011 The UK bank had an underwhelming first quarter, with pretax profit down 8 percent on the previous three months. The worry is that Barclays' investment bank, which generates more than half its earnings, is falling behind rivals and that UK regulatory reform will widen the gap.
Berkshire board tries cleaning up Buffett’s mess 27 Apr 2011 The audit committee has taken a much tougher stance than the Oracle of Omaha on the Lubrizol shares scandal involving onetime heir apparent David Sokol. The latest assessment is sager and should help restore confidence in Berkshire. But Buffett is left looking incredibly naïve.
J&J may have more on overseas shopping list 27 Apr 2011 The U.S. health giant's $21.3 bln purchase of Synthes is its largest ever. A big deal seemed a way for J&J to deploy its $28 bln of cash, largely trapped overseas. But it is paying mostly in stock. Despite problems with its current businesses, J&J may have further deals in mind.
UK recovery doesn’t show much sign of rebalancing 27 Apr 2011 First quarter GDP growth of 0.5 percent banishes the worst fears of a double dip. Though manufacturing is improving, business services are leading the revival. The overall picture is of a recovery driven by loose money. With further austerity to come, the economy remains weak.
Generali affair shows why Italy underperforms 27 Apr 2011 The seemingly lavish expenses and hefty payoff for Cesare Geronzi, the insurer's former chairman, give a glimpse of the complex tradeoffs that bedevil Italian corporate and political life. To pep up its lacklustre economy, Italy needs companies to start working for shareholders.
CenturyLink takes measured leap into the cloud 27 Apr 2011 The rural U.S. landline operator is jumping into the sexier business of data hosting by acquiring Savvis for $3.2 bln. Though there's a hint of desperation about it, especially with the big Qwest integration task, it's a smart way to get with the times. And the price looks right.
Russia holds promise for private equity players 27 Apr 2011 International private equity firms are expanding into Russia, and the Kremlin is rolling out a $10 billion fund to lure them. Even without this official blessing, the high growth and profitability potential of Russia's underdeveloped businesses deserves investors' attention.
Fed runs risk of losing control of markets 27 Apr 2011 The U.S. central bank may have missed its last chance to signal the possibility of a rate rise this year. Gold, oil, the dollar and many price data suggest the Fed's ultralow rates and benign view of inflation are behind the curve. It could be very tough to catch up later.