Disrupting payments: A guide for the perplexed 28 Apr 2015 Smartphones are changing how people spend money. Whether from Apple, Google, Facebook or startups, banks face competition in a $700 bln industry they once dominated. There’s plenty of room for all, though: most newcomers cannot operate without the help of the old guard – for now.
Ford Q1 shows reliance on single powerful cylinder 28 Apr 2015 The automaker fell short of profit estimates but expects results to improve. The first three months of the year, though, emphasized the outsized importance of its F-150 truck as well as how much a strong dollar can hurt. That should rein in excessive investor enthusiasm.
BP and Total find downstream respite 28 Apr 2015 Strong results in refining and marketing limited the profit fall at the two European majors. With the oil price down, the gains are especially welcome. But downstream overcapacity will bite in the medium term, while upstream businesses remain hostage to the oil market.
Roaring Daimler can rival BMW in investor rewards 28 Apr 2015 The Mercedes maker recorded its best ever quarter for sales and operating profit. With profit margins rising and a cash pile of 20 bln euros, it’s time to re-engineer the payout policy. BMW, which is mulling a special dividend in 2016, can again serve as a role model.
Economy can neither make nor break UK elections 28 Apr 2015 Britain’s quarterly growth rate has halved to 0.3 percent. The figure will become a political football days before a tight election. But it is not high enough for the ruling Conservatives to inspire voters with their economic track record and too high for rivals to damn them.
Commerzbank capital-raising recognises new reality 28 Apr 2015 The German lender is raising 1.4 bln euros to push its main capital ratio above 10 pct. Commerz once saw 8 pct as enough. But investors are taking a tougher stance and banks need to keep a new pan-European regulator sweet. More holdouts will capitulate.
Elliott comes out ahead in Alliance Trust truce 28 Apr 2015 Two of the three directors proposed by the U.S. activist will join the Scottish firm’s board. Meanwhile Alliance CEO Katherine Garrett-Cox avoids a humiliating defeat and gets a year to fix performance. Both sides compromised - but Elliott, and outside investors, do better.
Huge Apple payouts play catch-up with China growth 28 Apr 2015 The $760 bln iPhone behemoth is adding $50 bln more to its buyback plans. Quarterly numbers, though, show the Middle Kingdom overtaking Europe as Apple’s second-biggest market after 71 pct growth. CEO Tim Cook is in danger of taking more fire for returning cash too slowly.
China SOE fusion could topple cult of competition 28 Apr 2015 A mooted $569 bln merger between Sinopec and PetroChina looks a step back for reform and efficiency. But competition between state-backed firms isn’t always helpful. A more demanding shareholder, pricing power and superior regulators could be better spurs to improve performance.
DuPont investors: give Peltz a chance 27 Apr 2015 Proxy firm ISS is backing the activist and a second nominee. The case isn’t very strong. But Peltz on his own has a track record and a $1.8 bln stake. He’d get a year and then it would be up to the $65 bln chemical group whether to give him an age waiver to stand for re-election.
U.S. watchdog bites hacking victims too randomly 27 Apr 2015 The FTC has fined the likes of hotelier Wyndham over cyberattacks on the grounds that breached defenses were “unfair” to consumers. That encourages tighter security but doesn’t define what’s sufficient. Rules based on useful standards would be better than arbitrary penalties.
Pharma Arbageddon fears keep traders on sidelines 27 Apr 2015 Teva is after Mylan, which wants Perrigo. Such multibillion-dollar hostile deals are usually catnip for M&A punters. Recent failures have made them skittish, though. And these two battles come with cross-border complexity, antitrust and a poison pill. No wonder arbs are wary.
Deutsche Bank sticks to investment banking guns 27 Apr 2015 The German lender is chopping up to 17 pct of investment banking assets. That sounds hefty, but pales next to a 53 pct shrinkage at Barclays. Partly out of necessity, Deutsche is still betting that fixed income will rebound. The first quarter had as much evidence against as for.
VW’s best strategic options may be the simple ones 27 Apr 2015 Ferdinand Piech’s exit gives Volkswagen room to rethink. Europe’s largest carmaker can ditch the former chairman’s more grandiose growth visions. It can create ample additional value by shunning M&A and focussing on existing strengths, cost control and cash generation.
Varoufakis finds economics PhD gives little wisdom 27 Apr 2015 The Greek finance minister is learning that politics requires different skills from graduate school and media success. Some economists, from Imperial Russia to modern Indonesia, have done brilliantly, but Yanis Varoufakis could help write a book on what a doctorate isn’t good for.
Deutsche Bank revamp puts capital ahead of returns 27 Apr 2015 Exiting Postbank, and cutting 200 bln euros of investment bank assets and 3.5 bln euros of costs, is what the German lender needs. A 5 pct leverage ratio goal is also higher than expected, raising the bar for European rivals. But it means investors face a wait for decent returns.
Capgemini reboots with big bet on North America 27 Apr 2015 The once-cautious French group is bidding $4 bln for private equity-backed IGATE. The friendly deal is at a pricey 22 times 2015 earnings. Still, the boldness could pay off. The IT services giant gets a faster-growing, higher-margin business, heft stateside, and tax benefits too.
Hugo Dixon: UK election poses complex EU exit risk 27 Apr 2015 The chance of Britain quitting the EU will depend on the outcome of next month’s general election. But the question is unlikely to be simple given the probable involvement of the SNP or the Lib Dems in supporting a government led by either Labour or the Conservatives.
Tokyo Electron flop shows limits of M&A diplomacy 27 Apr 2015 Applied Materials’ $12.8 bln all-share takeover of the Japanese firm broke taboos in a country that is wary of foreign buyers. But after 19 months, U.S. regulators scuppered the tie-up. Investors will hope it doesn’t discourage other Japanese groups from considering bold deals.
China frothy markets churn up funding opportunity 27 Apr 2015 Companies are using rising prices to raise equity capital. Buoyant stocks have also made regulators more relaxed about new supply. For a country that has gorged on corporate debt, more equity sounds like a good thing. If investors were more discerning, it really would be.
India retirees’ stocks push lacks Japan’s zeal 27 Apr 2015 The $125 billion Employees’ Provident Fund is making its maiden foray into equity. The planned 5 percent allocation to stocks doesn’t pack the punch of Japanese pension funds’ recent portfolio shift. But a bolder switch will require overcoming unions’ mistrust of markets.
Piech exit opens door to VW governance revamp 26 Apr 2015 The chairman’s resignation ends a worrying spate of boardroom conflict at Volkswagen. But there is a risk. Europe’s biggest carmaker may struggle without Ferdinand Piech’s tough love. Revamping its unwieldy and outdated governance structure can keep the group on the road.
Time Warner Cable’s greed comes home to roost 24 Apr 2015 When boss Rob Marcus lunged for Comcast’s $45 bln bid, he gave in to the buyer’s demand that it pay no fee if the deal got torpedoed. Now Marcus is empty-handed in a rapidly changing industry. Rival suitor Charter may return, but Time Warner Cable’s negotiating power is weaker.
M&A advice can be seen clearly with beer goggles 24 Apr 2015 Corporate finance has more in common with lager and ale than meets the eye. The bulge bracket in both industries had been losing market share to smaller craft practitioners. The Guinness makers of mergers – Goldman Sachs and Morgan Stanley – are staging a slow pour of a comeback.
Google’s Schmidt again plays adult in DE Shaw buy 24 Apr 2015 The tech giant’s executive chairman is taking 20 pct of the hedge fund firm off bankrupt Lehman Brothers’ hands. The billionaire was brought into Google to supervise its young founders. Not for him the frivolity of, say, a sports team investment like Steve Ballmer’s.
Review: The politics of anti-inequality 24 Apr 2015 Anthony Atkinson’s “Inequality” is a UK-centric manifesto to help the poor and restrain the rich. The Oxford academic’s specific proposals are mostly sensible, but they dodge serious questions about the role of the welfare state and the balance of national and global justice.
HSBC exit from London is far from clear-cut 24 Apr 2015 The UK-based emerging markets bank says it is looking at where it should best be headquartered. The regulatory, economic and reputational costs of being in London have clearly risen. But HSBC’s realistic alternatives – Hong Kong and Shanghai – both carry major risks.
Labour to gain from "follow the money" UK voting 24 Apr 2015 People vote with their wallets. The governing Conservative coalition may earn credit for presiding over five years of low interest rates and a strongish pound. But a Breakingviews calculator suggests a weaker record on growth, house prices and stocks could swing votes to Labour.
AstraZeneca’s reliance on one-offs is unsettling 24 Apr 2015 The pharma group managed to beat expectations in Q1 despite wrestling with patent expiries. One-off disposals of $309 million helped boost operating profit to $1.8 billion. Raising funds makes sense at a time when Astra is challenged, but investors shouldn’t rely on them.
Santander finds Uncle Sam-friendly way to expand 24 Apr 2015 Spain’s biggest bank is merging its asset management arm with that of UniCredit, with private equity help. Both lenders gain from meshing cash-generative, capital-light businesses. But Santander does so without adding scale in the United States - where it still faces big regulatory hurdles.