Telcos’ most important speed-dial: the regulator 27 Jul 2017 European operators Orange and Telefonica trade on a slight premium to big peers in Britain and Italy, despite similarly cut-throat home markets. Both have already invested heavily in fibre, so investors have more clarity over cash flows. They’re also less burdened by regulators.
AstraZeneca drug flop is bad, not terminal 27 Jul 2017 A cancer treatment failed to live up to high hopes, wiping as much as $14 billion off the company’s value. The outlook for the UK drugmaker and its boss Pascal Soriot is suddenly more uncertain. But there are other areas of growth – and Astra is now an easier takeover target.
Nestlé is behind in consumer goods bake-off 27 Jul 2017 In a slow sales environment, global food giants need a new growth recipe. Danone and Unilever are both buying higher-growth companies and using fashionable cost cutting philosophies to improve profitability. Bigger rival Nestlé is trying too, but less convincingly.
Deutsche’s problems extend well beyond trading 27 Jul 2017 CEO John Cryan is successfully cutting costs but revenue fell even faster in the second quarter, by 10 pct from a year ago. The lender suffered from the same difficult trading conditions that hit peers but its retail unit also disappointed. The boss is running to stand still.
Lloyds is a good bank in a bad place 27 Jul 2017 The UK lender beat earnings expectations – the productivity of its loan book is rising as costs fall. The bank could be worth 10 percent more were it not for fears about Brexit and a bottomless pit of charges for past bad behaviour. Sadly those problems aren’t disappearing soon.
RBS gains more than consumers from state aid fudge 27 Jul 2017 The UK bank will pay over 800 million pounds to hang on to a lending arm that European antitrust authorities wanted it to offload. The boost to competition is hard to assess. But the Treasury-negotiated deal hauls RBS closer to becoming a normal bank – at a good price.
Shell gets everything right except producing oil 27 Jul 2017 The Anglo-Dutch oil and gas giant beat forecasts in the second quarter. Earnings more than tripled to $3.6 bln from a year ago helped by its downstream refining business and recovering prices. With its debt falling also the big worry on the horizon is its stagnant production.
Nintendo shows mastery of multi-platform game 27 Jul 2017 The Japanese videogames giant beat forecasts, sending its shares higher. The new Switch console is a hit, while Nintendo is also getting the hang of mobile games and using characters like Super Mario offline. Now the only real drag is that the company hoards so much cash.
U.S. crackdown on Hong Kong auditors lacks force 27 Jul 2017 U.S. regulators have suspended a Hong Kong auditor after it refused to share a mainland issuer’s papers, citing orders from Beijing. The tough move won't resolve bigger problems in a weak U.S-China audit agreement, but renegotiation seems unlikely any time soon.
U.S. Steel forges best argument against trade war 26 Jul 2017 Rising demand and restrained imports led to blowout earnings at the $4.7 bln steelmaker. While management's hopes for tariffs on bogus national-security grounds are receding, investors are better served by a focus on upgrading high-cost production over protectionist lobbying.
Facebook quest beyond ads should top itinerary 26 Jul 2017 The social network beat profit estimates as more brands sought to reach its 2 bln users. Yet revenue growth is easing and mobile’s dominant share of advertising has limited upside. For a company near the top of its game, it’s a good time to explore alternatives to Madison Avenue.
Permian producers tighten squeeze on U.S. rivals 26 Jul 2017 Hess is joining Anadarko in trimming capital spending as oil prices stay stuck under $50 a barrel. Meanwhile smaller Permian producers show little sign of throttling back. With lean balance sheets and growing efficiency, they look set to continue to inflict pain on competitors.
New York Times could risk all-digital bet 26 Jul 2017 Online subs surged with Trump’s rise. But print-ad revenue is down a quarter in two years, adding to job-cut angst. Ending printing would be radical but not absurd. Breakingviews estimates the company would need 1.4 mln, or 50 pct, more paying digital users to end up even.
LVMH’s only bad look is a now-fashionable euro 27 Jul 2017 Operating profit at the Louis Vuitton owner jumped 23 percent in the first half. The French group’s lucrative clothing and handbag division last performed this strongly during China’s shopping frenzy in 2011. Europe’s strengthening currency could yet cramp the company’s style.
New Ford boss leaves shareholders stuck in traffic 26 Jul 2017 Jim Hackett talks a big game about improving the carmaker’s capital use and its mobility unit. In his first quarter at the helm, he used tax breaks to beat estimates and mask future earnings pain. He will quickly need to do better than this to navigate the stock out of the mire.
SEC brings dodgy digital-currency sales to earth 26 Jul 2017 The U.S. watchdog says 2016’s biggest so-called initial coin offering was a securities issue that didn’t comply with the law. That will crimp a market that has boomed to $1.3 bln so far this year. A crackdown will test whether it’s worth the trouble of making ICOs legitimate.
Hadas: What Brexit forecasters got wrong 26 Jul 2017 The UK government’s pre-referendum forecasts about what leaving the EU would mean were gloomy, but not dark enough. What they missed: British inflexibility, the damage from unlinking trade, the challenge of migration and the lingering costs of national self-humiliation.
EU play for primary dealers may speed their demise 26 Jul 2017 Banks that buy EU debt directly from governments might have to move jobs out of London after Brexit to retain the privilege, Reuters reports. Such strong-arm tactics may drive some out of a business that has already grown less appealing and force a rethink of how bonds are sold.
Ceconomy plays to German retail stereotype 26 Jul 2017 As befits a country known for thrifty shoppers, the newly listed electronics retailer has bought cheaply into Fnac Darty. While Ceconomy could probably afford a big premium to take over its French rival, it will take just a 24 pct stake – enough to keep rival bidders at bay.
Noble turns to radical medicine 26 Jul 2017 Banks gave the stricken commodity trader a few months’ reprieve. Now its new boss is selling key energy units, writing down controversial assets and planning $1 bln more in asset sales. There is a long way to go but at least he is tackling Noble’s pressing liquidity problem.
ITV takeover is increasingly plausible plot twist 26 Jul 2017 The UK broadcaster, which recently named easyJet’s Carolyn McCall as its next CEO, is 15 pct cheaper than three months ago. A bidder like Liberty Global could now make a decent return – but would have to brave the risk of a further slowdown in the free-to-air TV ad market.
Daimler could be next on the break-up autobahn 26 Jul 2017 The German carmaker is thinking of turning its divisions into legally separate entities. Engineering group Siemens did that with its healthcare unit, which it plans to list. Carving out Daimler’s trucks could unwind a long-standing conglomerate discount of perhaps 30 bln euros.
CKI’s push into energy-metering looks smart 26 Jul 2017 Hong Kong tycoon Li Ka-shing’s infrastructure firm is frontrunner to buy Germany's Ista, Reuters says. That should mean steady cashflows plus higher returns than regulated utilities. A mooted price of more than $5.2 bln looks decent, at roughly 11 times EBITDA.
C-suite stasis hurts India’s non-performing banks 26 Jul 2017 While New Delhi has ditched bosses of some flailing state banks, private lenders with lots of bad loans have stuck with the status quo. Axis and ICICI have each had their chief since 2009 and significantly lagged rivals. A lack of movement at the top holds back corporate India.
Chipotle’s yuck overwhelms financial yum 25 Jul 2017 The $10 bln burrito chain delivered healthy financial results that exceeded expectations. It won't be enough to restore confidence, however, after a new suspected norovirus outbreak and video surfaced of rodents at one location. More radical change at the top may be necessary.
Exchange Podcast: Duff McDonald 25 Jul 2017 Harvard Business School has trained world leaders, billionaire entrepreneurs and convicted felons. Duff McDonald, author of “The Golden Passport,” discusses the seamier side of Harvard's teachings with Rob Cox.
U.S. colleges may need to start on M&A course 25 Jul 2017 After tripling in real terms since the early 1970s, tuition costs are now rising only a hair faster than CPI. Cost cuts won't offset flagging enrollment, the result of a stronger job market and demographic shifts. Merging could help, especially for small private schools.
Holding: SEC floats a terrible IPO idea 25 Jul 2017 A top agency official invited firms going public to consider blocking investors from banding together to sue. That would upend decades of policy and leave many frauds unpunished. Iffy claims against Arconic and others, though, mean shareholders may have themselves to blame.
Citi’s past keeps its future in restraints 25 Jul 2017 CEO Mike Corbat is counting on stellar performance from the retail bank to grow earnings per share an eye-popping 80 pct by 2020. Early progress is promising. Even achieving part of the goal should help Citi's stock. Nearly a decade on, however, previous losses remain a big drag.
Despite help from SUVs, GM still isn’t there yet 25 Jul 2017 The $54 bln U.S. automaker made more money than expected in the second quarter thanks to a shift from cars towards trucks and crossovers. Now, though, it’s making too many smaller vehicles. After exiting unprofitable overseas markets, CEO Mary Barra has to slim down at home, too.