Fitbit tracks fast path to value destruction 2 Nov 2016 The wearable-device maker is proving just how hard hardware can be. Turning a fad into a lasting business is even tougher. A weak holiday sales outlook sent investors running. Fitbit is a worthwhile case study to keep nearby the next time a hot gadget IPO comes to market.
Facebook may become victim of its own success 2 Nov 2016 The $360 bln social-media company posted another sterling set of results. A 60 pct increase in ad sales, however, might make brands start to worry about its growing dominance. Sloppy missteps on privacy and partisanship won't help either. Newer outlets like Snap could benefit.
Newspaper business model imposed by market 2 Nov 2016 New York Times quarterly print revenue declined a fifth and the Wall Street Journal is radically redesigning to cope with tough conditions. A long-running debate by publishers over the merits of advertising versus subscriptions seems quaint. The choice has been made for them.
AT&T gets a sneak preview of Time Warner fight 2 Nov 2016 U.S. trustbusters sued the telecom titan and its DirecTV unit for sharing information with rivals over baseball TV rights. The case reflects worries about gatekeepers gaining power over programming. As it seeks approval to buy Time Warner, AT&T can expect to hear the question often.
U.S. Election Day is the new Friday-night dump 2 Nov 2016 Controversial companies such as Valeant, Viacom, SeaWorld and Mylan are releasing earnings on Nov. 8 - the day of the presidential poll - or Nov. 9. Good or bad news may sink with minimal media or investor attention as American eyes focus on the next occupant of the White House.
South Africa, land of the limping buffalo 2 Nov 2016 President Jacob Zuma faces a new probe over corruption allegations, just days after inflated charges against Finance Minister Pravin Gordhan were binned. Graft worsens South Africa's challenges, from unemployment to slow growth. Zuma himself is central to the problem.
Aging tech provides fertile M&A hunting grounds 2 Nov 2016 Broadcom's $5.5 bln deal for Brocade is the latest transaction to mix equal parts strategic logic and financially appealing cost savings. Stagnating sales, cheap money and maturing technology give acquisitive firms like Broadcom plenty of targets to choose from.
Carmakers get stuck in irrational R&D pile-up 2 Nov 2016 VW spends more on research than Apple, showing carmakers are among the most generous companies with their R&D budgets. Making cars cleaner, safer and autonomous is a must, but too many engineers are reinventing the same wheel. They would do better to team up.
Time Warner’s sale to AT&T obscures future hurdles 2 Nov 2016 The HBO operator handily beat quarterly expectations as it prepares for its $85 bln sale to the telephone company. Still, small signs serve as a warning for the buyer. Chief among these is the long-term sustainability of cable fees from its powerful Turner networks division.
Cox: First Boston-Bankers Trust may unite in 2017 1 Nov 2016 Credit Suisse and Deutsche Bank bought the Wall Street firms decades ago but are still subscale in the United States. The two could limp along, never meeting their cost of capital. Joining forces, and spinning off the combination, is an alternative with many virtues to consider.
Alibaba’s big data ambitions become an easier sell 2 Nov 2016 Cloud, media and things other than online retail now make up almost a fifth of the e-commerce giant's total revenue. Alibaba's shift from being a shopping platform to a data and content firm is still a work in progress, but boss Jack Ma's vision is looking increasingly plausible.
Goldman has lucky escape from tech wreck 2 Nov 2016 Tech valuations present pitfalls for banks. Goldman Sachs valued Powa Technologies at up to $18 bln a few months before the UK payments app firm entered administration. Though Goldman was never hired, the disclosure is embarrassing - its recommendations carry significant weight.
Merkel’s climate-change zeal turns into hot air 2 Nov 2016 The German chancellor fought hard for tough global carbon reduction targets. Yet at home, implementation of the Paris accord is gridlocked by fears of job losses, and an important plan has been delayed. If Angela Merkel cools on fighting climate change, the world is in trouble.
Hong Kong zombie stocks lurch toward IPO bankers 2 Nov 2016 China Forestry, listed in 2009 and suspended from trading two years later, has caught up with co-sponsors Standard Chartered and UBS. Both banks just revealed probes by the Hong Kong regulator. If that's the pace of justice, there are dozens more undead firms that could lash out.
KFC discovers weak appetite for Chinese consumers 2 Nov 2016 Yum Brands' spun-off local unit is a straightforward play on rising mainland consumption, offering Chinese growth with U.S. governance. A surprisingly modest valuation for the KFC operator suggests punishment for past mistakes - and caution about China's economic transformation.
Samsung’s biotech IPO is an $8 bln medical mystery 2 Nov 2016 The giant conglomerate's BioLogics unit is valuing itself generously. Demand for biological drugs is soaring, but the group's untested technology and model – touted as analogous to the contract manufacture of semiconductors – mean investors have to take its prospects on trust.
Valeant sale epitomizes new CEO’s dilemma 1 Nov 2016 Selling the Salix unit for $10 bln would be Joseph Papa's first big move since taking the reins. It would help pay down the drug giant's whopping debt. But it would also reduce desperately needed future cash flows. Papa needs to prove he can do more than preside over a fire sale.
Chipotle’s latest activists may bring secret sauce 1 Nov 2016 Investors want the ailing burrito chain to split the chairman and CEO roles and appoint an independent to run the board. Freebies and a new burger chain failed to shake off the taint of its food-safety scandal. Overhauling Chipotle's governance may provide the right ingredient.
M&A boutique endures deal vicissitudes firsthand 1 Nov 2016 Morgan Stanley alum Paul Taubman has coped with a scandal and a bigger drop in volume than rivals since the advice shop he merged with Blackstone's floated a year ago. Hiring more bankers may help. But PJT's travails are a reminder that deal-related returns are hard to deliver.
Obamacare could use a transplant, not euthanasia 1 Nov 2016 Donald Trump and fellow Republicans are using rising premiums and departing insurers to renew calls to bury the U.S. president's signature healthcare program. But they lack a viable alternative, meaning millions would lose coverage. Bipartisan surgery is a smarter option.
Gannett deal flop helps case for new mogul era 1 Nov 2016 The USA Today publisher dropped its bid for Tronc, a merger that would have brought cost savings. A relentless downturn is forcing painful cuts in many newsrooms. Business-model experiments work best away from public markets. More sole proprietors like Jeff Bezos are welcome.
Global economic prospects look worse for women 1 Nov 2016 Even in highly equal Norway, new data shows women are barely present in some industries. These are exactly the sort of sectors that will benefit from a revival of government-backed spending programmes. Well-intentioned economic policies risk spreading their fruits unevenly.
MPS’ best bet is faulty Plan A 1 Nov 2016 The troubled Italian lender rebuffed a rescue plan from banker Corrado Passera, who says the board obstructed his efforts. With the clock ticking, MPS had good reason to stick with its current rescue plan. Yet Passera’s criticisms are valid.
Bridgewater DNA stains FBI election surprise 1 Nov 2016 Director James Comey is under fire for disclosing a renewed probe into Hillary Clinton's emails days before the U.S. vote. He learned about "radical transparency" at Ray Dalio's $150 bln hedge-fund firm. The dogma of openness has its limits in both companies and government.
StanChart’s returns goal hinges on cost rigour 1 Nov 2016 The UK emerging markets bank is making good progress on shedding its worst assets. But with third-quarter revenue only flat on the previous three months, it’s all the more important to hit cost targets. The challenge is doing so without losing more business.
Shell and BP offer two sides to same coin 1 Nov 2016 The Anglo-Dutch major and its UK cousin reported earnings that beat expectations. Both have performed similarly as investments. With $30 billion of assets to sell in the wake of its acquisition of BG, Shell is a riskier but possibly more rewarding bet on the oil price.
Saudi finance minister reshuffle reflects reality 1 Nov 2016 Outgoing Ibrahim Alassaf served for 20 years in an increasingly disempowered ministry. Replacing him now is a nod to the more centralised control of Deputy Crown Prince Mohammed bin Salman, and that reducing Saudi's budget deficit is indivisible from wider policy on oil.
Bank of Japan sits back for Clinton-Trump ride 1 Nov 2016 The central bank kept policy unchanged, even as it trimmed inflation forecasts. Adding extra stimulus just one meeting after introducing a new, yield-focused framework would look panicky. The BOJ also needs to keep something in reserve for upsets like a U.S. election shock.