Amazon Web Services delivers profitable twist 24 Apr 2015 Breakneck expansion at the web retailer’s cloud computing unit recalls Amazon’s glory years. Companies are seeing the benefits of letting someone else handle servers, storage and software. This time, the Jeff Bezos playbook contains a welcome wrinkle: growth and maybe profit.
China’s cyber crackdown: A guide for the perplexed 24 Apr 2015 The People’s Republic is squeezing technology companies. New banking rules and counter-terrorism legislation could make it harder for foreign groups to operate in the expanding market. Is security just an excuse to protect domestic players? Breakingviews cracks the code.
Comcast’s boss should live to buy another day 23 Apr 2015 A collapse of the $45 bln Time Warner Cable deal would leave controlling shareholder Brian Roberts with a second ugly scar. Overconfidence also contributed to a failed tilt at Disney a decade ago. Comcast rebounded with NBCU, which suggests Roberts will be back before too long.
Silicon Valley might as well embrace Uncle Sam 23 Apr 2015 The Pentagon is setting up shop in tech-land’s backyard, essentially taking their long-standing relationship public. With cybersecurity a rising concern, generals and geeks locking arms will do each some good, even if it further stokes consumer suspicions about Big Brother.
Inefficient markets lie behind flash crash arrest 23 Apr 2015 The U.S. says Navinder Sarao put out fake orders. But if human and electronic trend-followers didn’t dominate trading, such “spoofing” would be harmless. And if the tail of leveraged derivatives didn’t wag the cash market dog, Sarao would not be fighting extradition from the UK.
Deutsche’s attitude problem compounds Libor hit 23 Apr 2015 The German bank is paying a record $2.5 bln to settle rate-rigging charges. To make things worse Deutsche Bank misled the UK regulator and others. That’s not smart in a highly regulated industry. With a potential currency market fine, the reputational damage could grow.
Europe’s top activist gets bogged down in Germany 23 Apr 2015 Cevian takes a longer-term, lower-key approach than U.S. rivals. But it’s found a particularly knotty problem at Bilfinger. The industrial group has seen five profit warnings and a 45 pct stock decline over the last year. A good exit is conceivable, but not straightforward.
Greed isn’t good enough for ex-Lehman trader 23 Apr 2015 Jonathan Hoffman is in court demanding $84 mln in bonuses from the defunct U.S. firm – even though Barclays paid him the same hefty sum. The UK bank’s ex-boss Bob Diamond once touted a “no jerks” policy to fix the culture. Hoffman exemplifies why some banks have so far to go.
GM miss hints at broader struggle for U.S. autos 23 Apr 2015 Restructuring, higher taxes and weaker sales in Russia and Brazil hit the carmaker last quarter. The strong dollar’s effect is more worrying, though. It hurt in Latin America, and Japanese and European rivals are gaining an advantage over Detroit’s Big Three in the U.S. market.
Ericsson miss could give investors deal envy 23 Apr 2015 Shares in the Swedish telecoms kit maker fell 8 pct after margins in its networks arm missed expectations. Ericsson’s issues, including sluggish North American growth, aren’t surprising. But rival Nokia’s tie-up with Alcatel should focus minds on whether it also needs a deal.
French investment banking has less than meets eye 23 Apr 2015 Returns at BNP Paribas’ and Societe Generale’s trading and advisory businesses are better than peers. But the pair’s divisions carry less equity against gross assets than rivals. Before dashing in, investors should consider what the return would be with greater leverage restraint.
Political wishes can’t stop euro fall 23 Apr 2015 French and German ministers hint that they would prefer the single currency to stabilise after its long export-friendly drop. Currency markets sometimes listen to central bankers but generally ignore politicians. Gloom about the euro is pervasive. Further losses are likely.
Japan stocks can rise beyond symbolic Nikkei high 23 Apr 2015 The index closed above 20,000 for the first time since 2000. Though Japan’s bull market is more than two years old, a trade deal with the United States could make returns still sweeter for investors. Stronger corporate earnings and more money-printing could also boost equities.
SoftBank put on spot by Yahoo Japan exit 23 Apr 2015 The Japanese conglomerate is the natural buyer of the portal should the U.S. search group offload its 36 pct stake. But beefing up won’t impress investors struggling to see the value of its parts. A spin-off by Yahoo will up pressure for SoftBank to justify its business model.
Facebook growth rate depends on users liking R&D 23 Apr 2015 The social network spent 30 pct of Q1 sales developing new products. That’s proportionately about twice as much as Google and 10 times the outlay at Apple. At 42 pct, top line expansion fell short of expectations. To keep it up, all the investment needs to bear fruit.
Petrobras $17 bln charge lances festering boil 23 Apr 2015 The long-awaited writedown puts a concrete figure on years of corruption and mismanagement. The number looks big enough to satisfy investors, but shows the Brazilian oil giant’s problems go well beyond graft. It’s a start toward rebuilding financial and political confidence.
Banker-bashing comeback in full electoral swing 22 Apr 2015 It’s not just in the UK, where voters hit the polls in May. Though the U.S. election is over 18 months away, the debuts of Clinton, Cruz, Paul and Rubio are already inciting the torch-and-pitchfork brigade against finance. Some barbs should worry Wall Street more than others.
McDonald’s serves up Earth Day nugget 22 Apr 2015 The fast food chain aims to end its role in deforestation, following agriculture giant ADM’s lead. Investors, whose pressure helped, are also alert to climate change and water risks. Such shifts boost the annual homage to the planet, but they are bite-sized appetizers at best.
Brussels gains by bashing Gazprom 22 Apr 2015 The European Commission belatedly charged the Russian gas giant with abusing dominant positions. Gazprom has other, bigger headaches. But watchdogs gain credibility by taking on such a politically sensitive target. And Europe shows its commitment to a joined-up energy market.
Greek bargaining position stronger than it looks 22 Apr 2015 Athens may well not repay its ECB debt by July. But things would only get really nasty – via capital controls and bust Greek banks – if member states deem this a hard default. If they choose to, Greek leader Alexis Tsipras could blame them – and lead his country out of the euro.
Reeling oil titans fall back on familiar scapegoat 22 Apr 2015 Exxon boss Rex Tillerson and Conoco chief Ryan Lance slammed U.S. regulation during the industry’s big annual gathering this week. Even if there is a valid point or two to be made, busting out that old chestnut now is rich given the evidence of a recent surge in domestic output.
Whiskey heist proves potent for cybersecurity age 22 Apr 2015 An old-fashioned case of 200 missing bottles of prized Pappy Van Winkle bourbon, which Kentucky cops cracked on Tuesday, is almost refreshing in an era of daily digital theft. It was an inside job. Watching one’s own is as important and difficult as guarding against intruders.
Edward Hadas: Hooray, trading slowed on Friday 22 Apr 2015 A Bloomberg outage limited activity in some usually busy financial markets for a few hours. That’s no loss. Excessive trading does more economic harm than good and encourages risky leverage. Slower markets would be less wasteful – though people would still find ways to speculate.
Tesco’s new beginnings are a long way from the end 22 Apr 2015 Last year’s 6.4 bln stg pretax loss shows the size of the problems at Britain’s biggest grocer. A 45 pct share price rebound since December reflects hope that Dave Lewis, the newish CEO, will restore the retailer’s former glory. Investors are taking a great deal on trust.
Volvo turnaround will be helped by heavy-duty hire 22 Apr 2015 The Swedish truckmaker poached Martin Lundstedt from Scania, its stronger VW-owned rival. The new CEO and good results sent shares soaring. Volvo is already excavating itself out of a hole - but Lundstedt could speed up the recovery by getting out of diggers and bulldozers.
Scottish nationalists could help UK economy 22 Apr 2015 The regional party may end up in a coalition government after the May election. The SNP’s unrealistic economics in the campaign for independence point to disaster. But the party’s newest utterances suggest something better, including a brake on austerity fundamentalism.
India’s poor state banks will test investor limits 22 Apr 2015 State Bank of India is leading the rush to raise capital with a $2.4 bln share sale. A stronger economy makes bad debts look less bad. Investors will also have to believe a government pledge to meddle less in lending decisions. Even so, few banks look tempting.
India in depth: A race to write cheques 22 Apr 2015 Not all state governments will know what to do with an unanticipated $30 billion jump in their share of tax revenue this fiscal year. But that’s a short-term problem. Eventually, shifting spending from New Delhi to sub-national governments should boost India’s growth potential.
Flash crash case suggests small can be systemic 21 Apr 2015 U.S. prosecutors have accused a UK trader of manipulating futures markets and contributing to a broader rout in May 2010. It’s a timely reminder of the limits of regulating risk. The lawsuit also shows how one person can have as much power as a big institution to stir a crisis.
GE Capital sale may be zero-sum TBTF game 21 Apr 2015 Shrinking the finance unit should allow GE to ditch its systemically worrisome tag. One possibility is Wells Fargo buying $83 bln of the assets, in deals that would surpass the comfort level of regulators for most bank M&A so far. And it would make one mega-bank even more mega.