RIM doesn’t need to remain Canadian 31 May 2012 The struggling BlackBerry maker is weighing its options, from joint ventures to a sale. Despite past form, some officials’ preference to keep the company Canadian shouldn’t worry would-be foreign buyers too much. RIM’s declining sales and significance present a bigger challenge.
Less to Wells Fargo lending deal than meets eye 31 May 2012 The U.S. bank aims to lend $425 mln to end a Memphis discriminatory lending lawsuit and is adding other sweeteners like down-payment grants. It’s good PR, but Wells already offers similar aid in areas where it’s not being sued. And it still faces a bigger test from the feds.
John Malone again proves fickle media friend 31 May 2012 The U.S. cable magnate has escalated his fight for control of Sirius XM, the satellite radio company he bailed out in 2009. Malone is known for clever, aggressive tactics, even against Rupert Murdoch. Sirius is another cautionary tale for rival moguls and investors alike.
Xstrata throws down gauntlet to shareholder spring 31 May 2012 Glencore-Xstrata will only go ahead if investors approve retention schemes including a three-year, 28.8 million pound package for Mick Davis to run the merged commodities firm. But shareholders have no easy choices. Voting no risks killing the merger and wounding Xstrata’s board.
While painful, Morgan Stanley can handle downgrade 31 May 2012 A Moody’s cut to the bank’s credit ratings could clip $200 mln or more off the bottom line and boost funding costs. But much of this risk is already priced in. With the two other rating agencies holding steady, CEO James Gorman should be able to navigate the triple-B shoals.
Blackstone loss could be gain for Facebook owners 31 May 2012 Judges are citing a ruling against the LBO shop to push firms for more pre-offering disclosure. That could help shareholders claiming the social network downplayed revenue doubts ahead of its IPO. The suits are still iffy, but the precedent should at least keep them in court.
Euro-wide deposit guarantees won’t fix this crisis 31 May 2012 Policymakers are pushing for a scheme to protect Europe’s savers. Combined with powers to wind down failing lenders, the plan could free banks and governments from their toxic embrace. But it will take years to implement, and won’t ease depositors’ biggest fear: a euro exit.
Telefonica still behind the curve 31 May 2012 The Spanish telecom company wants to spin off its German, and possibly Latin American, units to reduce debts. It will also pay part of its dividend in shares. But it’s not the best time to sell assets and the move will raise the company’s exposure to its troubled home market.
France’s state sector pay cap is necessary folly 31 May 2012 The French government is about to force a 1-to-20 remuneration scale in state-owned companies. This means that most of their CEOs will have to take a serious pay cut. The measure doesn’t seem to make much sense. But it is needed to make austerity more palatable.
Graff’s new luxury paradigm hits the rocks 31 May 2012 Falling markets and the Facebook IPO flop have helped sink Graff Diamonds’ $4 billion Hong Kong listing. But Graff came with hard-to-sell quirks. The bet that investors would buy into a “new” kind of luxury at a time of risk aversion was too optimistic.
High-end luxury looks exposed as China slows 31 May 2012 Hong Kong’s arts auction and property market is cooling as mainland Chinese buyers retreat. Tighter credit and China’s political cycle have both played a role. The hardest hit could be “hard” luxury products like sports cars and watches, often assumed to be the most resilient.
Super Mario Bros need a relaunch 31 May 2012 Italy will be next in the firing line if the Spanish and Greek crises worsen. The ECB’s Mario Draghi will then need to ride to the rescue. But, in return, Italian PM Mario Monti will probably be required to inject extra impetus into his reforms.
India needs an adult conversation 31 May 2012 As GDP growth slumps to 5.3 pct, the county goes on strike. The people are up in arms over a sensible cut in petrol subsidies. The government’s instinct is to pander and roll back, but it might get more respect by telling the truth about what’s needed to get the economy moving.
China bankers’ bad habits die hard 31 May 2012 The investigation of a top AgBank executive will remind investors of the frauds that dogged Chinese banks of old. Lenders have come far, but low pay, poor disclosure and incomplete reforms leave much scope for bad behaviour. As banks’ balance sheets get bigger, so do the risks.
EU view on financial imbalances is short sighted 31 May 2012 The European Commission’s insistence that countries with deficits should bear the brunt of the financial turnaround is destructive. The euro crisis isn’t a morality tale. Surplus countries, first of all Germany, must contribute to rebalancing the monetary union’s finances.
Exxon’s fracking gag makes Chesapeake look good 30 May 2012 That’s a rare feat. The troubled gas firm is infamously opaque. But Chesapeake’s openness on the risks of fracking puts larger rivals like Exxon to shame. After another large minority vote from investors for more information, Big Oil should follow its troubled cousin’s lead.
Old rich send message to Zuckerberg’s ilk 30 May 2012 Acquainted for five decades, the Rothschild and Rockefeller patriarchs are finally launching a transatlantic investment alliance. It’s slower, quieter, more dispersed money than the Facebook founder’s. But it has staying power even hoodied tech billionaires may one day crave.
Agnellis give thumbs down to Italy 30 May 2012 Fiat Industrial is merging with CNH, its U.S. subsidiary, and is set to become a Dutch-domiciled group listed in New York. This may herald a full takeover of Chrysler by Fiat Auto, with its listing moving across the Atlantic too. Italy may complain but it is largely to blame.
Private equity may owe Obama a debt of gratitude 30 May 2012 Mitt Romney has weakly rebutted the president’s attacks on his Bain Capital tenure. But others who see the good side of buyouts are gradually speaking up. Election-year mud-slinging could end up boosting the industry, especially if LBO firms themselves seize the moment.
Greek liquidity spat shows EU bank balkanisation 30 May 2012 Credit Agricole has asked for so-called Emergency Liquidity Assistance for its Greek subsidiary. The country’s central bank won’t play ball. It’s understandable that Athens only wants to help home-grown lenders. However, it’s another crack in Europe’s fragmented financial market.
Ethical economy: what to do about debt 30 May 2012 Debt, a little like sex, is a two-sided relationship which pleases partners and can be good for society. But for both, indiscriminate and excessive use is harmful. That’s the lesson of the financial crisis. Daring methods are required to encourage better behaviour.
Spain will regret refusing front-door bailout 30 May 2012 Instead, Madrid has begged for all sorts of back-door support: bond-buying by the ECB, direct recaps for its banks, a quasi-ECB rescue for banks. Germany and the ECB aren’t likely to allow these unless Greece blows. But, at that point, Spain will be in a terrible crisis.
WPP must prove that Sorrell is worth his pay 30 May 2012 The media group’s investors are angry about a hike in the CEO’s salary and bonus. Sorrell makes a big contribution to WPP’s overall performance, though it’s unhealthy for any company to rely so much on one man. The board needs to show that shareholders benefit from his success.
Funds of funds must reinvent to survive 30 May 2012 Arpad Busson’s fund of hedge funds group EIM is reportedly looking for a suitor. Man Group recently acquired another fund of funds for no upfront costs. Investors are tired of paying double fees for underperformance. But consolidation and lower charges might just save the sector.
Euro slide helps Germany a lot, periphery little 30 May 2012 The biggest beneficiary of a weakening euro is Germany, not the problem periphery. German exports are a big share of GDP. Greece and Spain export little - and don’t have Germany’s global reach. Even when it falls, the euro works better for Germany than for Europe.
Li Ka-shing opts for succession China-style 30 May 2012 The HK tycoon has avoided a power scramble by naming his eldest son as heir to his business empire. To ensure Li’s values prevail, his successor will be surrounded by long time acolytes. It’s much like what’s happening in Beijing. In both cases, the newbies will need new tactics.
Dewey lawyers pay for being partners in name only 29 May 2012 Far from sharing the bankrupt U.S. firm’s ups and downs, they were often at each other’s throats. That’s bad form in business, even in the best of times. More collaboration may not have saved the once-venerable law shop. But it could have defused the harsh court battles to come.
Chesapeake may need to sacrifice more than assets 29 May 2012 The embattled U.S. gas producer is already dispensing with energy fields to raise cash. Now investors, including uppity Carl Icahn, want directors ousted. Replacing two up for election without Chesapeake’s OK is near impossible. But resistance is counterproductive at this stage.
Tech firm’s perpetual-motion stock gizmo sputters 29 May 2012 Selling unlimited VoIP phone service for $20 a year has proved mixed for MagicJack. A side business writing put options on its own stock did better in 2011 - especially when teamed with large buybacks. But the CEO’s forced share sale to cover loans has broken the connection.
Buffett steals insider-trading show in absentia 29 May 2012 The Berkshire Hathaway chairman didn’t appear in a New York courtroom last week. But his presence loomed over Raj Gupta’s insider-trading trial in more ways than one and dredged up the still-unsettled role his former lieutenant David Sokol played in last year’s Lubrizol deal.