Honda snub bursts Takata’s financial force field 5 Nov 2015 The Japanese carmaker will stop using air bag inflators made by its troubled supplier. The public rebuke from its biggest customer raises doubts about the future of Takata’s principal business. It also undermines investors’ assumption that the group is too important to fail.
StanChart shakeup turns screws on India’s tycoons 5 Nov 2015 The lender plans to offload some of its share of loans worth $3.5 bln to Essar Global. The steel-to-ports conglomerate backed by the Ruia brothers is one of India’s most indebted. It’s an overdue warning to the country’s tycoons that suppliers of cheap credit are becoming rare.
Facebook a master at hooking users on mobile habit 4 Nov 2015 The social network reported more than 1 bln active daily visitors, a testament to its success in persuading people to check in on smartphones and tablets. Its reward was a 40 pct rise in ad revenue. Future growth may depend on pushing this kind of digital addiction.
Expedia finds back door to Airbnb’s market 4 Nov 2015 The travel site is paying $3.9 bln for HomeAway. Though the vacation-rental firm lacks the urban clout of its better-known rival, moving in with its new parent will help. Cost cuts are low, but HomeAway’s cash pile will ease the blow to Expedia of shelling out a 28 pct premium.
Rainbow-chasing unicorns get Groupon reality check 4 Nov 2015 The daily-deal company’s stock cratered on cut forecasts and a CEO change. It’s now worth about $2 bln, a third of Google’s offer price in 2010. Tech startups may favor tales of takeover refuseniks like Facebook and Twitter, but it’s easy to get lost in valuation fantasyland.
Financial tech has as much to gain as fear from D.C. 4 Nov 2015 A new lobbying group of five big Silicon Valley firms reflects concerns that Washington may not understand the benefits of booming fintech. Banks have long made similar complaints about Uncle Sam. Like them, the industry needs to realize that regulation can help rein in excess.
Trader’s conviction vindicates juror cyber smarts 4 Nov 2015 Prosecutors won the first U.S. trial for manipulating prices by placing and cancelling orders, known as spoofing. Algorithms did the actual transactions, making criminal intent tough to prove. Yet a lightning-fast verdict shows juries are up to nailing high-speed market cheats.
Three roadblocks to real change at scandal-hit VW 4 Nov 2015 Family shareholders, unions and the Lower Saxon state all stand in the way of sweeping reforms the carmaker needs, such as an outside chairman. A share-price implosion might sway the family, but for the others to agree, Chancellor Angela Merkel may need to bang heads together.
Time Warner leaving gate ajar for Fox return 4 Nov 2015 Boss Jeff Bewkes thwarted Rupert Murdoch’s $80 bln takeover bid with some bold stand-alone projections. A year later, the HBO owner’s results are failing to impress. Its stock trades below Fox’s offer price and at a discount to peers, making it vulnerable to a fresh approach.
Boardroom gender targets only do half the job 4 Nov 2015 Bonuses paid to City executives should be linked to how many senior women they employ, according to a review commissioned by the UK government. The idea probably has more merits than drawbacks. But promoting women to the highest echelons may be easier than retaining them.
New look M&S has incomplete designs 4 Nov 2015 First-half results show the 8.5 bln stg UK retailer has done much to improve itself internally - non-food gross margin guidance was revised up, again. But Marks & Spencer needs to get the top line moving to deliver sustained returns. Fashioning external appeal is a harder task.
High-return, low-pay ING offers model for peers 4 Nov 2015 The local regulator prevents the Dutch bank paying bonuses over 20 pct of salary. ING still makes a 12 pct return on equity. It isn’t an investment bank, and isn’t immune to regulatory attack. But its success implies ropier rivals should change pay policies - or their strategies.
Oil funds misery may leak into global markets 4 Nov 2015 Equity turbulence led to a loss for Norway’s wealth fund. Energy-dependent funds may in turn get their revenge. With oil prices low, governments are tempted to dip into hoarded wealth. And the funds themselves are becoming more apt to diversify away from financial assets.
Japan Post’s red-letter day delivers a value gap 4 Nov 2015 Shares in the Japanese postal operator and its finance arms soared on their stock-market debuts. Low valuations, high yields and familiarity helped the $12 bln triple IPO to fly. Yet the share moves also reveal just how lukewarm investors are about the core postal business.
Singles’ Day spat shows Alibaba’s jealous side 4 Nov 2015 The Chinese e-commerce giant’s annual Nov. 11 shopping promotion has become a national festival. Now a smaller rival has accused Alibaba of bullying merchants into using only its platform. Market power may be good for driving sales, but not if it prompts regulators to weigh in.
Elon Musk turns Tesla rounding error into $2.5 bln 4 Nov 2015 That’s the jolt to the carmaker’s worth after its CEO said it delivered 23 more vehicles in Q3 than thought. It’s classic irrational shareholder exuberance to value a sliver of good news above an earnings miss. As Tesla expands, though, that may prove harder to do.
VW’s new fiasco puts governance back in crosshairs 3 Nov 2015 The carmaker is taking a 2 bln euro charge after saying it may have cheated on fuel-economy stats, too. This escalation yet again flags VW’s rotten processes and culture. Appointing outsiders as directors, chairman and even CEO would be the best way to prove it’s cleaning house.
Investors top courts as judges of banker conflicts 3 Nov 2015 A jurist tossed claims BofA played both sides of Signet Jewelers’ bid for Zale, reversing himself after a higher tribunal said shareholder approval of a deal can override such charges. A crackdown on skewed loyalties is overdue, but owners deserve a say on when it goes too far.
U.S. election complicates Puerto Rico repair job 3 Nov 2015 President Obama wants Congress to help the island out of a $72 bln hole. His calls for debt restructuring, better oversight, tax and healthcare tweaks make sense, but risk falling prey to candidate posturing. It may take a full financial meltdown for D.C. to roll up its sleeves.
G-SIFI envy turns into G-SIFI ennui 3 Nov 2015 Not long ago, being on the list of 30 “global systemically important financial institutions” was a big deal. The lack of market reaction to the newly updated version shows times have changed. Gung-ho local regulators now make banks pile on capital, systemically important or not.
Carmakers should treat emissions like fatalities 3 Nov 2015 Seatbelts and airbags made cars safer and prevented fatalities. Air pollution kills too, but the auto industry has focused on the law’s letter, not its spirit. VW’s cheating in emissions tests may be a turning point. Rival Peugeot’s pledge to come clean shows the way forward.
Mixed economic messages complicate Carney’s job 3 Nov 2015 Timing the UK’s first rate rise in eight years is especially tough for Bank of England Governor Mark Carney. Recent economic signals are muddy. Old certainties, such as links between unemployment and inflation, are in doubt. Hesitant central bankers make for choppy markets.
Dismal AIG earnings add fuel to Carl Icahn’s ire 3 Nov 2015 The activist wants the insurer to break up and cut costs. AIG boss Peter Hancock is pledging to do the latter. But a $231 mln Q3 loss emphasizes just how much work the company still has to do to get shareholders on board. A carve-up may be painful, but it’s not off the table yet.
UK flunks Uncle Sam’s class-action lawsuit lessons 3 Nov 2015 Suing en masse is now allowed in Britain so long as losers pay winners’ fees. That and other rules may limit the perceived excesses of U.S.-style group suits, but could also make worthy cases too costly to file. If outsiders bankroll them, that risks conflicts and other problems.
StanChart faces years of pain for humdrum gain 3 Nov 2015 New CEO Bill Winters is dumping risky loans, cutting costs, and raising $5.1 bln in capital. He thinks the loss-making lender can rebound by serving affluent consumers in emerging markets. But even if all goes to plan, a modest 10 pct return on equity is still five years away.
UBS seals new banking era of utility-like returns 3 Nov 2015 Since its 2012 revamp the Swiss bank has led the EU investment bank pack. But despite a jump in Q3 net profit to $2.1 bln, it’s scaling back return objectives for the third time in two years. Macroeconomic softness and rising capital demands are skewering targets - for all banks.
BMW hints at globalisation’s big promise 3 Nov 2015 The German carmaker’s results add weight to the theory that regional diversity may make the auto industry less cyclical. A strong Europe and U.S. offset weaker China, pushing pre-tax profit up 13 percent in the third quarter. If BMW can keep it up, the shares deserve a rerating.
Candy Crush bid relies on hope over experience 3 Nov 2015 The London-based maker of the sweet-matching mobile game is selling to Activision for $5.9 bln. It’s just a 20 pct premium, which leaves investors in last year’s IPO with a loss. With few synergies, this looks as much an excuse to use excess cash as a sound bet on future hits.
Cheap oil no deterrent to Shell-BG deal 3 Nov 2015 The Anglo-Dutch major says its bid for BG Group still works at mid-$60s oil thanks to higher expected synergies. Cheaper oil means BG is probably worth less too, but cost savings will help. The deal needs a recovery in oil prices sooner rather than later for it to work.
VW skids further into the emissions scandal ditch 3 Nov 2015 U.S. regulators accuse the carmaker of putting devices that fool pollution tests on even more autos, including Porsches and a wider array of Audis. If true, the claims would contradict VW’s defense, expose the company’s internal probe as hapless and drag its new CEO into the mire.