Message to Nintendo: call a smartphone maker fast 29 Jul 2011 It slashed its forecast and prices for its newest handheld game device, and its stock plummeted. The strong yen and weak U.S. consumer spending are problems, but Nintendo's nemesis is the iPhone. If it doesn't become a big player in the smartphone market, the game could be up.
BSkyB reminds News Corp just what it missed out on 29 Jul 2011 Surging cash flows show the UK broadcaster reaping the rewards of heavy investment, and allow it to embark on a big share buyback. The results are a reminder of why partowner News Corp was so keen on a buyout and the heavy financial costs of its hacking scandal.
Republican infighting not fatal to reaching deal 29 Jul 2011 The political circus in Congress makes for marvelous spectacle. The Republican House speaker is fighting for an agreement to save his job, while some Tea Partiers claim God is telling them to prevent one. Markets are growing weary of the theater, but a finale looks near.
Markets could be making a Lehman-like mistake 29 Jul 2011 Investors have displayed remarkable calm over the US debt ceiling fiasco. Most seem convinced lawmakers will come to a lastminute agreement by Aug. 2. Default, after all, is unthinkable. But so, too, was the failure of Lehman. The markets' faith may again prove to be misplaced.
Apple, Google and Microsoft revalue smartphone DNA 29 Jul 2011 A battle among tech giants has lit up the market for thousands of patents that could dictate the future of mobile devices. Auctions, activists and further purchases certify the hype. Once appraised for their royalty streams, such invention rights now bring strategic premiums.
Next Spanish PM must hit the ground running 29 Jul 2011 Outgoing socialist Prime Minister Zapatero has rightly called early elections. But it means Spain will have four months of electoral campaigning with a lame duck government at a critical time. The leader of the favoured conservatives should clearly state what he wants to do.
Madoff crusader views the dawn before the dark 29 Jul 2011 Trustee Irving Picard secured a $1 bln settlement for the fraudster's victims right before a federal judge gutted his $10 bln case against HSBC. He's done well for scammed investors. But now rulings in bigger cases look harder to win, his impressive run seems near an end.
American GDP figures show need for policy rethink 29 Jul 2011 While legislators fiddle over the debt ceiling, the real economy is struggling to emerge from the Great Recession, growing just 1.3 pct in the second quarter. Fiscal and monetary policies have proved unproductive. It's time for policymakers to get serious and even a bit radical.
Prokhorov plays allotted role in Russian politics 29 Jul 2011 The billionaire has become the most prominent oligarch to enter politics since illfated oil magnate Mikhail Khodorkovsky. But the cases have little in common. Prokhorov is not opposing Russia's leaders, who may welcome him as a harmless alternative to more serious challenges.
Profit stumble adds to pressure on Exxon chief 28 Jul 2011 The world's largest publicly traded oil firm suffered a rare miss. The main culprit was refining, where quarterly earnings can be capricious. But at a time when Exxon is struggling to win over investors on its beefy bet on natural gas, Rex Tillerson can ill afford such slips.
Cyprus looks like next euro bailout candidate 28 Jul 2011 A power explosion has triggered a political crisis, but Cyprus's underlying problem looks like Greece's. A bailout appears inevitable. But with nonresident, nonEU bank deposits at 120 percent of GDP, the euro zone may feel it is rescuing the Russian mafia's offshore haven.
IMF should phase out involvement with Greece 28 Jul 2011 Representatives of emerging countries at the IMF are voicing concerns about the institution's role in the Greek bailouts. They have a point. The fund should step back from the euro debt crisis; and the zone should learn to take care of itself.
Spain misses golden chance with bank tests 28 Jul 2011 The problem in Spain was not excessive softness on sovereign exposure, but on property. So long as the nettle isn't fully grasped, confidence in the sector will remain low and the government itself will be vulnerable to infection.
Sprint’s troubles are more than merger deep 28 Jul 2011 The No. 3 U.S. wireless carrier is understandably working hard to block AT&T's $39 bln takeover of TMobile. But Sprint has bigger problems. Miserable Q2 results and the resulting loss of over $2 bln of market value suggest Sprint has few ideas about how to stop its long slide.
France may bear brunt of euro zone friendly fire 28 Jul 2011 The euro zone has revamped its bailout fund, but needs to finance it. To meet its tasks of buying government bonds and recapitalising banks, the EFSF may need to issue more debt, competing with euro zone sovereigns and pushing up their borrowing costs. France looks vulnerable.
Shell’s big bets are paying off 28 Jul 2011 The AngloDutch oil major is pushing the boundaries. It is turning gas into diesel fuel and building a floating LNG vessel several times the weight of the Titanic. Technology gives Shell an advantage despite the challenge of making the economics work. So far, so good.
Saudi economic might more fragile than it looks 28 Jul 2011 High energy inefficiency and government spending will start eating into the kingdom's petrodollars within a decade. The government doesn't have its head stuck in the sand. But major economic reforms are needed to put the country on a healthier financial path.
Wall Street’s M&A shops wobble after a run 28 Jul 2011 The crisis aftermath has been good for indie firms. But Lazard and Evercore missed Q2 estimates because of a slowdown in new deal mandates and higher pay, respectively. Greenhill is trying to calm nerves about departing execs. Still, each looks robust enough to regain stride.
Fixed income doubts will hamper Credit Suisse 28 Jul 2011 Slow markets, tough capital rules and a strong franc led the Swiss bank to cut 2,000 jobs. But it still wants to be a big fixed income player, despite falling revenue. Its ibank will struggle to make its cost of equity. The 15 pct ROE goal for the group is a tall order too.
S&P throws up another securitization roadblock 28 Jul 2011 Commercial mortgage financing has had a tough road to recovery. Pulling a $1.5 bln bond deal thanks to a Standard & Poor's rating snafu won't make it any easier. It's reassuring to see raters being more rigorous, but sideswiping deals in the process should make investors wary.
Santander must do more to protect itself from Spain 27 Jul 2011 Profit at the Spanish bank fell short of expectations because of a oneoff charge in the UK. But Spain is the real worry spot, even if it is a fraction of Santander's global business. It should bulletproof its business at home by increasing provisions.
Conoco’s post-split lag shouldn’t deter copycats 27 Jul 2011 The U.S. oil giant's shares got a small lift from beating Q2 expectations but haven't received their proper due from a bold carveup plan. Investors may be struggling to see how a divided Conoco will fit in with new peers. But the breakup value should eventually become clear.
PIGS turn European banks into lemmings 27 Jul 2011 Most lenders spent the past year slashing their exposure to the euro zone periphery. Yet stress test disclosures show a number ramped up their holdings. Technical factors are partly to blame. But some banks have also been forced to inflate their portfolios for their own survival.
Safety, not growth, should be CIC’s priority 27 Jul 2011 The impressive 11.7 percent return at China's sovereign wealth fund in 2010 may be more a source of worry than comfort. It cut cash reserves aggressively and now has a fifth of its $410 bln assets in alternatives. Big cyclical bets could turn sour at just the wrong moment.
Dunkin’ IPO extends bubble thinking beyond tech 27 Jul 2011 The doughnut chain's shares surged in their debut even after pricing over the range. Its valuation of 17 times EBITDA isn't as silly as the sales multiples fetched by LinkedIn or Pandora. But a premium to Starbucks is undeserved. Investors are overexcited about perceived growth.
Russia’s airport crackdown looks like shakedown 27 Jul 2011 A judicial investigation into Moscow's Domodedovo airport is fuelling suspicions that the Kremlin is again expropriating private property, to the benefit of friendly oligarchs. Security concerns and the airport's murky ownership look like excuses for a Russianstyle takeover.
Boehner fights to right U.S. finances – and his job 27 Jul 2011 To achieve either, the House speaker has to make the math work. His first bid to boost government borrowing authority and cut debt was flawed. But it's still the likeliest path through the crisis. Failure would show a party divided and give cranky Republicans reason to oust him.
Sweden’s a stretch for pharma deal-machine Valeant 27 Jul 2011 Valeant, the dealhungry North American drugmaker, may have its eyes on Meda, its $3.5 bln Swedish lookalike. Both prefer growth through M&A to heavy spending on research. But the similarities do not point to synergies. Scant geographic overlap also argues against a merger.
Investors too complacent on possible U.S. downgrade 27 Jul 2011 Washington needs a smackdown from markets. They're unlikely to get it. Investors are already growing comfortable with the U.S. losing its AAA rating, just as long as it drops just one notch. But such complacency puts the government's credit on a slippery downward slope.
Japan’s rising yen heightens its own debt dilemma 27 Jul 2011 After the March quake, it s growing faster than expected. But investors piling in to escape US and EU risks should not confuse rebound with recovery. Pushing up the yen hurts exports and slows growth. Without tax and pension reform, Tokyo's heading for its own deep fiscal crisis.