Thruppence: Can Snapchat unmask dodgy borrowers? 8 May 2015 Alternative lender Affirm has raised $275 mln for a model that rates creditworthiness using social media data alongside other old-school indicators. Breakingviews columnists debate whether info gleaned from Facebook and its ilk could supplant traditional credit-scoring methods.
Second Scottish referendum looks some way off 8 May 2015 The nationalist triumph in Scotland may suggest that a second poll on secession from the UK is imminent. But with the economy struggling, and the oil price low, the SNP may hold back. The overall result also means the Conservative victors have no need to trade political favours.
UK vote gives City short-term gain, long-term pain 8 May 2015 Britain’s election will give firms a short-term boost. A much better than anticipated showing by Prime Minister David Cameron’s Conservative Party will soothe investors who had feared an inconclusive result. But the surprisingly decisive outcome creates medium-term headaches.
Hugo Dixon: Tory win brings marked EU exit risk 8 May 2015 David Cameron’s Conservatives are clear victors. A new coalition with the pro-European Lib Dems isn’t needed. Tory eurosceptics may push the prime minister to take an excessively tough line with the EU in the runup to the referendum he has promised on the UK’s membership.
Cameron has work cut out to sustain relief rally 8 May 2015 UK stocks and bonds, and the pound, have jumped on the Conservatives’ surprise election success. That’s to be expected given fears of a messy outcome. But the result leaves open questions on EU membership and Scotland. Such uncertainties could hold back investment and growth.
Monsanto heaps pressure on Syngenta 8 May 2015 The U.S. seeds giant has made a $45 bln approach to the Swiss pesticide firm. The target rejected this as too cheap and too risky. Syngenta has a point: there will be major political and antitrust hurdles. But it needs to lay out just how it will create more value on its own.
Alibaba generation shift treats investors as kids 8 May 2015 The e-commerce group is swapping its chief executive for a younger insider. The plan was drawn up before the company’s IPO. Yet Alibaba has offered no explanation. Founder Jack Ma wants to promote young leaders, but investors deserve adult answers on who makes decisions and why.
Li Ka-shing adds funding flair to telco turnaround 8 May 2015 The Hong Kong tycoon’s sale of a third of his British mobile division for 2.8 bln pounds raises funds for the purchase of Telefonica’s O2, without ceding control. Throw in debt and the tycoon will be able to buy a business worth more than 9 billion pounds with barely any cash.
Fitbit IPO flaunts refreshing financial health 8 May 2015 The maker of wearable fitness trackers marks a rare Silicon Valley stock sale with strong profit alongside fast sales growth. Fitbit’s founders also exhibit an uncommon focus. A dual-class share structure runs with the crowd, however, and Apple is just now sprinting in this race.
U.S. trucker offers Facebook owners ride to future 7 May 2015 Swift Transportation and the social networking giant face votes to dump feudalistic dual-share structures. Upset about their founder-CEO, the decades-old shipper’s second-class holders backed the idea last year. Facebook owners one day may find themselves similarly frustrated.
Rob Cox: Wall Street suits revel in Bonnaroo vibe 7 May 2015 Live Nation’s purchase last week of control in the iconic jam-band gathering forced financial analysts to turn their spreadsheets on an unusual target: 80,000 sweaty hippies in the Tennessee woods. Though peak festival seems nigh, investors are enjoying the scene for now.
Yelp’s cry for help heard around the internet 7 May 2015 When the $3.4 bln review site rebuffed Google six years ago, its future looked almost limitless. Now Yelp is exploring a sale. That will resonate through boardrooms and venture capitalists’ tree-houses as they ponder slowing growth and the limits of online business models.
Euro zone bond rout breaks whole new set of rules 7 May 2015 Remember when life was simple and easy money pushed up all asset prices? No longer. Government bonds whipsawed on Thursday and stocks are down, while oil prices are up. News isn’t the driver, either. The latest market dramas lack a rationale, but they’re still worrying.
Alibaba owners: be careful what you wish for 7 May 2015 The $220 bln Chinese e-commerce group turned in better-than-expected numbers for the quarter to March, sending shares up 10 pct. The trouble is, that’s enabling forays into unrelated businesses which are eating into margins. Jack Ma’s creation is not for fretful investors.
U.S. interloper likely to win IT server tussle 7 May 2015 Things are hot in the air-conditioned data-centre business. Equinix is eyeing a $3.5 bln bid for Telecity that would kill the UK outfit’s all-stock purchase of Interxion. It’s hard to see Interxion biting back. Telecity owners are being offered 28 times 2015 earnings.
Whole Foods risks bitter millennial harvest Ready Soon |7 May 2015 The $17 bln grocery chain has added stores so fast it’s hurting established outlets and growth. Now it’s planning shops with cheaper food pitched at younger shoppers. That will increase competition, hurt margins and force Whole Foods’ bloated-looking stock onto a diet.
ECB’s bank board-crashing makes sense – to a point 7 May 2015 The euro zone’s financial stability gnomes will observe board meetings. Handled right, the ECB should glean extra insight – after all, corporate culture starts at the top. But regular sessions with board committees may reveal more about how Frankfurt’s 123 charges really operate.
Slow Siemens is stretching investors’ patience 7 May 2015 Reinventing the lacklustre engineer is taking a long time. Siemens’ industrial profit fell by 5 pct to 1.7 bln euros in its second quarter. CEO Joe Kaeser is stepping up cost-cutting by slashing another 4,500 jobs. But it looks like 2015 may be another lost year.
Adecco could have avoided top jobs headache 7 May 2015 The surprise exits of the Swiss staffing group’s CEO and CFO lopped almost $1 bln off its $15 bln value. The self-styled “world’s leading provider of HR solutions” might have handled the departures better – like giving investors advance notice that it was looking for a new leader.
Australian bank crisis-proofing takes toll on NAB 7 May 2015 The lender is bracing for higher capital demands by raising $4.4 bln from investors. With valuations still high despite a slowing home market, rivals may follow. Reinforcing a healthy sector is prudent. For shareholders, though, the era of supercharged returns is ending.
IPO exuberance could jeopardize China rally 7 May 2015 The 6 pct fall in Shanghai stocks in four days could be sobriety setting in. More likely it’s due to investors pulling out funds to bet on new offerings. Eye-popping levels of demand suggest speculation still burns bright. Yet if it saps broader prices, confidence may evaporate.
Latest bank regulation attack looks wide of mark 6 May 2015 A new analysis estimates Dodd-Frank will lop $900 bln off GDP over a decade. The study takes some big leaps to get there. Even if the headline number isn’t outlandish, though, the broader implication is: the work completely ignores the far higher cost of Wall Street excess.
Mexico oil sale gets $6 bln show of support 6 May 2015 A local conglomerate and private investors are offering a 35 pct premium for Pacific Rubiales. That sounds high for a company hit hard by oil’s plunge and a deal unlikely to have many synergies. But it’s a sign of confidence in Mexico’s pending, long-awaited oil liberalization.
Memo to European banks: more work to do on capital 6 May 2015 Investors largely rewarded lenders whose Q1 results showed stronger balance sheets. They were tougher on those who backtracked, like Societe Generale, BNP Paribas and Deutsche. That disdain looks wise: in time banks will probably need to hold yet more equity against assets.
Glaxo smartly bucks the breakup trend 6 May 2015 The British drugmaker scrapped a flotation of its HIV unit and slashed a planned cash return. That’s unfashionable in an era of spinoffs and shareholder payouts. GlaxoSmithKline, though, needs diversity and financial firepower while it tends to the core pharmaceutical business.
Edward Hadas: The great British deficit confusion 6 May 2015 David Cameron and Ed Miliband both want to balance the UK government’s budget. But the prime minister and the opposition leader seem to misunderstand how government debt works. They are not alone. The obsession is shared by some deficit-loving and deficit-hating economists.
Alstom’s growth train has Chinese twist 6 May 2015 The French group’s focus on transport is paying off, with train orders up 10 pct and rising margins. But the merger of two larger Chinese rivals intensifies competition in Alstom’s global markets. Teaming up with Bombardier or Siemens may be its next destination.
Alexion puts high stock to good use in biotech bid 6 May 2015 The drugmaker’s $8.4 bln offer for rival Synageva includes a whopping 136 pct premium. The stonking price is based on the rare disease specialist’s view that the market underestimates its target’s value. Exchanging a chunk of pricey paper for the assets may be a savvy move.
UK poll has fat-tail chance of outright Labour win 6 May 2015 A messy left-leaning outcome remains the base case. But tweaking Breakingviews’ election calculator to reflect weaker-than-expected voter support for Scottish nationalists suggests the odds on a majority for Ed Miliband aren’t all that long. At least policy would be predictable.
Sainsbury sets battlefield tempo for UK grocers 6 May 2015 The price war at British supermarkets is entering a new phase. Big-picture strategic shifts and financial redeployments are giving way to grind. The 3 pct operating margin for the year to March at the 5 bln pound Sainsbury may define what is now realistic across the industry.