Apple needs more iPhone, less iCahn 23 Apr 2014 Once again, financial developments overshadowed technological ones in the tech giant’s Q2 results. A stock split, a dividend hike and a bigger buyback provoked a pop in the shares. Rather than Carl Icahn’s favorite subjects, CEO Tim Cook could use new products to talk about.
Buffett loses his voice – and maybe some sway 23 Apr 2014 The Omaha billionaire said he didn’t vote against Coca-Cola’s controversial pay plan even though he disagreed with it, for fear of sending a wrong signal about the CEO. That’s an odd message to convey. It doesn’t mean Coke shouldn’t hear what its largest owner is saying, though.
Stars align for European high-yield debt market 23 Apr 2014 French cable tycoon Patrick Drahi is selling 12 billion euros of junk bonds. The record deal was increased to meet investor demand. With defaults scarce, yields elsewhere low, and sluggish growth curbing policy rates, these are halcyon days for Europe’s high-yield market.
Valeant will need even more fancy legal footwork 23 Apr 2014 The pharmaceuticals company and hedge fund boss Bill Ackman built their Allergan stake by deftly tiptoeing around disclosure and insider trading rules. But a poison pill, antitrust issues and other pitfalls remain for the many law firms in the deal to navigate.
Apple and Google spats threaten the silicon goose 23 Apr 2014 America’s high-tech epicenter thrives on shared ideas and expertise. The smartphone rivals stifle both by squabbling over patents and poached workers. Silicon Valley shows no signs of slowing down, but the behemoths’ penchant for protecting their empires could inhibit innovation.
Gold miners ominously prospect for M&A treasure 23 Apr 2014 The Newmont and Barrick talks came amid a bidding war for the Canadian Osisko. That’s one deal short of a trend. A 30 pct drop in the bullion price means those with higher-valued shares may spy a chance to nab production on the cheap. The logic behind such digging has holes.
Edward Hadas: Inheritance can be less unequal 23 Apr 2014 Family is a big part of destiny, even when opportunities are supposed to be equal. Since children tend to take after their parents, the elite tend to be self-perpetuating, and poor kids will tend to become poor adults. Still, there are ways to soften the injustices of birth.
London gives BoE an emerging economy problem 23 Apr 2014 Foreign capital inflows are supporting a housing bubble in London, and have helped push up sterling - even though the UK’s trade position is almost dire. An unbalanced economy is getting worse. As pre-crisis emerging markets learned, this is a problem with no easy solution.
Primark sweet spot sugars ABF’s conglomerate pill 23 Apr 2014 Shares in UK-based Associated British Foods leapt 8 percent as its Primark discount retailer outlined bold U.S. expansion plans. ABF’s sugar processing unit also seems to be coping with a changing regulatory regime. The shape of the whole business is odd, but seems to work.
ARM offers a non-alarming mini-disappointment 23 Apr 2014 Shares in the $23 bln UK microchip designer fell 4 pct after royalty revenue for using its blueprints barely grew. But licences are strong, smartphone demand growth could return soon, and the “internet of things” is promising. The company’s high-margin model is still holding up.
WH Group’s chopped IPO still looks unappetising 23 Apr 2014 The Chinese pork producer is slashing its offering to as little as $1.3 billion. But its reluctance to cut the share price won’t tempt investors turned off by the fat valuation. With an overhang of private equity shareholders and a hefty debt burden the IPO remains a tough sell.
Sinopec retail sale is key to topping up its value 23 Apr 2014 The state-owned Chinese oil group is seeking investors for up to 30 pct of its petrol station arm. Though comparisons are tricky, multiples for other operators suggest a valuation of at least $50bln. A sale at that level could prompt a revaluation of the rest of Sinopec.
Coca-Cola deserves protest vote one way or another 22 Apr 2014 Several shareholders object to the $180 bln drinks giant’s equity pay plan. Some want the chairman and CEO jobs split. Nearly a quarter dissed top executives’ comp last year. With the stock underperforming, it’s no wonder investors are grouchy ahead of Wednesday’s annual meeting.
Regulatory dithering can cost the economy dearly 22 Apr 2014 The U.S. government’s continued deferral on the Keystone pipeline decision is a case in point. One year’s economic benefit from the project may be $1.8 bln; if the answer is no, the energy system can be optimized another way. Win or lose, regulators need to make up their minds.
Texas cracker spat hides Petrobras waste at home 22 Apr 2014 The state-run energy giant paid too much in buying a U.S. refinery for $1.2 bln in 2006, when President Rousseff chaired the board. But at $20 bln, a plant in Brazil is costing far more than similar facilities abroad. It’s a cash drain Petrobras and its investors can ill afford.
Fed and gridlock to thank for U.S. deficit decline 22 Apr 2014 Since five years ago, the expected ratio of government debt to GDP in 2019 has fallen from 81.7 pct to 72.5 pct. That’s a handy reduction. The Fed’s low interest rates have made a difference. But politicians can’t take much credit, having mainly just thwarted each other’s plans.
Car mega-recalls put economies of scale to test 22 Apr 2014 GM, Toyota and VW recently found problems in 16 mln cars between them. Industry recalls are rising thanks to shorter development times and more sharing of parts and production across models. The financial benefits outweigh the risks – as long as carmakers pounce on errors early.
Philips can still shine despite darker outlook 22 Apr 2014 The $30 bln electronics group’s flatlining revenue in Q1 has dimmed near-term growth hopes. Troubles with traditional lighting and healthcare scanners could persist. But the basic investment case for Philips looks sound, especially if weaker emerging markets rebound.
Valeant can boost its $47 bln bid for Allergan 22 Apr 2014 The pharma M&A machine, working with hedgie Bill Ackman, thinks it can cut $2.7 bln of costs from the Botox maker. At Valeant’s single-digit tax rate, that’s worth nearly $25 bln. And that’s just the start of potential benefits. The deal would add up with a much bigger premium.
GSK and Novartis treat each other’s problems 22 Apr 2014 The pharma giants are swapping assets worth up to $23 bln and merging others to focus on their respective strengths. Investors are cheering synergies, capital discipline and strategic focus. It’s a way to transform both businesses while avoiding the perils of a mega-merger.
Manchester United’s crisis has silver lining 22 Apr 2014 The English soccer club fired David Moyes, hapless successor to star manager Alex Ferguson, after one awful season. But the drama has an upside. Turmoil at the top of the game sustains fan and sponsor interest. As one of football’s biggest brands, United should benefit.
Graft purges don’t hurt shareholders – insiders do 22 Apr 2014 The sacking of China Resources’ chairman will worry other state company bosses. But shareholders in Chinese groups have less to fear from government crackdowns on powerful individuals than the culture of treating outside investors as an afterthought. This remains unaddressed.
Dawn raid makes comeback via activist drone strike 22 Apr 2014 Agitators usually take a stake in a company and then try to make something happen. Bill Ackman has instead teamed up with Valeant Pharmaceuticals to grab a 9.7 pct interest in $40 bln-plus Allergan, with a hostile takeover ready for deployment. It’s a potent battlefield tactic.
Pfizer stock poses best argument against mega-deal 21 Apr 2014 Sure, buying $84 bln AstraZeneca would yield tons of savings, and put cash trapped overseas to work. But big pharma deals often create more harm than good. Pfizer’s deal binge last decade led to poor investment returns. Subsequent slimming down has caused it to nearly double.
Barrick’s empire building deserves skeptical eye 21 Apr 2014 The Canadian giant is reportedly considering a $33 bln deal with Newmont. Barrick’s outgoing chairman said “hubris” drove past deals. Ex-Goldmanite John Thornton, who takes the chair next month, faces a big hurdle in convincing shareholders this won’t be another value-destroyer.
Missing inflation could make Asian bonds frothier 21 Apr 2014 Prices of goods in the region are rising more slowly than expected. Inflation drives bond yields up; a lack of it could send them downward, even though the U.S. Fed is threatening to edge up rates around the world. Asian debt is already pricey – it may get yet more expensive.
Chinese internet TV makes investors boggle-eyed 21 Apr 2014 Valuations are soaring despite a global tech sell-off, as companies eye an audience that could hit 77 million by 2015. But it’s unclear how China’s couch potatoes will generate profit: investors like Alibaba founder Jack Ma are ploughing in time and money for uncertain returns.
Blackstone leaves a trail of money to follow 17 Apr 2014 The buyout firm generated record quarterly earnings, in stark contrast to Wall Street’s slog. It’s the latest sign of a power shift from banks to shadow banks, broadly defined. Having confined big lenders, watchdogs could pick up the scent on Steve Schwarzman and his ilk.
Fed unease may yet shrink biggest U.S. banks 17 Apr 2014 A new leverage limit requires the eight largest to add another $68 bln in padding, on top of other rules on capital and liquidity. Janet Yellen still isn’t certain that’s enough. Sure, it’s the Fed’s job to worry. But big banks and their investors are already feeling the pinch.
Argentina tests Elliott’s cunning at Supreme Court 17 Apr 2014 Two cases challenge the hedge fund’s ability to work around U.S. laws that shield the country’s assets. The court is hearing one of them as it mulls another on paying debt-swap holdouts. Upcoming arguments in the first may reveal how creative collection plans fare in the second.