Request for IBM activism likely falls on deaf ears 6 Apr 2015 Some big shareholders are begging for a Big Blue shake-up. They have reason to be dissatisfied – 11 quarters of falling revenue have sent the shares into a slump. Snag is IBM has already exhausted the typical activist playbook of tapping the balance sheet, buybacks and disposals.
U.S. economy gathering steam despite jobs lull 6 Apr 2015 Rising wages, consumer confidence and housing demand should more than offset sluggish hiring in March. Besides, cutting unemployment gets harder as the rate falls toward 5 pct. With the economy far stronger than a year ago, last month’s report suggests a pause rather than peril.
Etsy priced robustly for handcrafted profitability 2 Apr 2015 The online marketplace for homemade stuff is targeting a $1.8 bln valuation in its IPO. Etsy is certainly growing its top line fast. But for investors to profit, the Brooklyn firm will need to prove it can stitch together eBay-ish returns from selling knit caps and the like.
NY judge gives 1970s sitcom a Silicon Valley spin 2 Apr 2015 A “Three’s Company” parody didn’t breach rights to the TV hit, despite similarities. Like rulings on Google Books and Aereo’s video streaming, the verdict reflects Big Apple legal thinking that ideas are for sharing. It’s a philosophy tech firms might want more courts to follow.
McDonald’s wage hike portends shareholder diet 2 Apr 2015 S&P 500 buybacks and dividends set a new record at $900 bln in 2014. But as U.S. unemployment falls, firms like the fast food chain are beginning to invest in workers. Higher pay costs, along with higher interest rates, could thin the wads of cash companies hand investors.
Nestlé wades into purest form of water risk 2 Apr 2015 The $243 bln Swiss giant faces populist protests for bottling and selling H2O from Canada and drought-hit California. The potential harm to its reputation may not be worth the effort. It’s Nestlé’s least profitable business, and consumers might just as well drink from the tap.
Review: Choking on digital exhaust 2 Apr 2015 Government and corporate mass surveillance of citizens is an aberration on a par with child labor or environmental pollution, claims security expert Bruce Schneier in “Data and Goliath.” He offers a rousing call for resistance, and hope for change - a few decades hence.
M&S share price has caught up with reality 2 Apr 2015 Latest trading figures show that the long-struggling British retailer has stabilised its business. Investors have re-rated the stock, up 44 pct in six months. The valuation is probably sustainable, but further big gains are unlikely. M&S stock may now mirror its earnings growth.
Greece comes kicking and screaming to reform table 2 Apr 2015 The Syriza government’s latest reform proposals include some concessions to its public creditors. The plan still lacks detail, and reneges on past promises. The government is fiddling while Athens burns, and the risk of an accidental euro zone exit is rising.
Swiss say-on-pay bodes ill for rainmaker wallets 2 Apr 2015 UBS and Credit Suisse face binding shareholder votes on executive compensation for the first time. These will judge aggregate, not individual awards. But Swiss banks must also disclose their top-paid executive. That makes it harder for dealmakers to out-earn their CEOs.
China columnist, Reuters Breakingviews 2 Apr 2015 The world’s leading provider of real-time financial commentary is seeking a columnist to lead its agenda-setting coverage of Chinese business, finance and economics.
Unhappy anniversary for Japan’s inflation drive 2 Apr 2015 It’s two years since the Bank of Japan cranked up yen-printing in a bid to lift annual price rises to 2 pct in “about two years”. But with companies and consumers refusing to spend the stimulus – and oil cheaper – inflation is at zero. The BOJ needs to think beyond bond-buying.
April 1 jokes expose greater fools of finance 2 Apr 2015 A Tesla prank involving a fake new product caused its shares to twitch. Meanwhile, Tinder for Uber seemed all too credible in a Silicon Valley littered with this-for-that business models. When investors can be easily duped, it’s a sign markets are high on hype and distortions.
Guest view: The RBI does need its wings clipped 2 Apr 2015 The Reserve Bank of India’s repressive influence is stunting the growth of finance. Governor Raghuram Rajan is fighting attempts to shrink the RBI’s role because of pushback from his officers, says Percy Mistry, author of a 2007 report on making Mumbai a global financial centre.
California drought may find relief from Down Under 1 Apr 2015 Governor Jerry Brown has ordered a 25 pct cut in water use. With reservoirs and snow caps low, it’s a wise, if belated, move. Now he needs a comprehensive plan for identifying new sources, reallocating existing ones and getting citizens to buy in. Melbourne offers a good model.
U.S. lenders tempted by new way to make bad loans 1 Apr 2015 A credit score that monitors whether Americans pay household bills on time should expand how many individuals can borrow from banks. But it could also encourage financial institutions desperate for higher returns to ignore more crucial metrics like income and outstanding debt.
Coal IPO may buck broader U.S. industry downturn 1 Apr 2015 Consol is preparing to float some anthracite assets. Coal is a troubled business, but the $6 bln U.S. energy group’s mines need little investment and make money at current low prices. And the stock offering is also being packaged as an MLP, which brings some handy tax benefits.
British bosses take ill-advised political pot shot 1 Apr 2015 More than 100 UK-based business chiefs say it would be bad if the incumbent Conservative-led government is defeated in the upcoming May election. It is a high-risk intervention with low potential returns. It exposes companies and enterprise more than it safeguards their interests.
Edward Hadas: Airline safety after the crash 1 Apr 2015 The German prosecutor says Andreas Lubitz was certified as a pilot despite treatment for suicidal tendencies. He seems to have deliberately crashed the Germanwings plane he was flying. The disaster looks like an aberration, but the industry’s approach to pilots needs a rethink.
Brazil has edge on Turkey in recovery strategy 1 Apr 2015 The two middle-income countries suffer from weak GDP growth, big current account deficits, high inflation and corruption. But they are taking different paths. Turkey’s authoritarianism is popular and destructive. Brazil’s new austerity is unpopular but will help even its critics.
Tidjane Thiam’s pay is insufficiently prudential 1 Apr 2015 The outgoing Prudential CEO was paid 8.3 mln stg in shares for hitting long-term targets. Given his record, the largesse can be defended. But the UK insurer - and fund manager – should follow peers in requiring such awards to be held until outperformance is proved sustainable.
Central banks won’t prop up the euro 1 Apr 2015 The single currency’s share of global foreign exchange reserves is at a 12-year low. Reserve managers haven’t bought euros to compensate for the fall in its value. Central banks’ lack of commitment to balanced forex portfolios leaves the euro free to fall further.
Nigeria’s democratic change is a real positive 1 Apr 2015 Africa’s biggest economy is set for its first peaceful transfer of power. Election winner Muhammadu Buhari, a 1980s junta leader, will find ruling harder now. Meaningful reform will take years. Still, better governance is good news for the populace and outside investors alike.
Elliott’s focus on Canon could pay off 1 Apr 2015 The U.S. hedge fund bought 10 pct of Axis, threatening Canon’s $3 bln friendly bid for the Swedish CCTV specialist. Canon is unlikely to give up. It could settle for a lower stake, and bide its time. But history suggests the already-rich deal could also get pricier.
China doesn’t yet belong in global currency club 1 Apr 2015 The yuan may meet the IMF’s vague terms for inclusion in its quasi-currency. That doesn’t mean it’s ready for a prominent place in central bank vaults. A big question is how the yuan might fare during a period of financial instability in China. Answers may soon be forthcoming.
Tata Motors’ $1.2 bln share issue is well timed 1 Apr 2015 The carmaker wants to raise cash to reduce debt and fund growth. Its struggling domestic unit, propped up by Jaguar Land Rover, is benefiting from a recent change in strategy. A full turnaround will depend on a pickup of economic activity in India.