Xi Jinping wannabes flub their lines at Davos 25 Jan 2018 Leaders including Emmanuel Macron of France and Germany’s Angela Merkel predictably spoke up for global cooperation ahead of Donald Trump’s finale. Unlike the Chinese president last year, however, their rhetoric fell flat. Competition for investment further muddles the message.
Fiat Chrysler powers ahead in carmaker wacky races 25 Jan 2018 Its shares are the industry's best performer of the past year, and its multiple leaves sleeker rivals for dust. Yet earnings are only so-so. Investors may be expecting a sale, or only clocking short-term results. It's a tricky lead for CEO Sergio Marchionne's successor to defend.
United puts airlines’ stability into tailspin 25 Jan 2018 CEO Oscar Munoz plans to put more planes in the skies, sparking fears of a price war and wiping billions off United’s and rivals’ market values. Industry profitability has already lost some altitude. A return to rampant competition will make that worse – especially for Munoz.
Rupert Murdoch’s next foe: Sky hedge fund holdouts 25 Jan 2018 The tycoon’s Fox looks set to deflect regulators’ objections to his bid for UK TV group Sky. But hedge funds could block the deal. The deep pockets of Disney, soon to own Fox, and the hope that cheaper soccer rights will boost Sky’s profit may stir them to seek a higher price.
City’s #MeToo moment is tipping point and catalyst 25 Jan 2018 The charity behind a men-only London dinner where female hostesses were groped has closed down. The scale of justified public censure means such events have no future. But the furore may also give new impetus to appoint more women to boards and redress gender pay inequality.
Activists beat bearable retreat in Clariant feud 25 Jan 2018 White Tale has surprisingly sold its stake in the Swiss chemical maker to SABIC. That may be a recognition its bid to shake up the group would fail. Exiting now may leave some money on the table, but the hedge fund consortium has probably made a decent return.
Romer exit flags World Bank’s human capital limits 25 Jan 2018 The academic known for his work on economic growth is leaving the bank after just 15 months. The attempt to shake up a staid institution fits his theories’ emphasis on new ideas. But his brash manner shows how organisations can be less than the sum of their inputs.
Small-town gamblers lend Macau casinos time 25 Jan 2018 Rising wealth in the Chinese hinterlands is driving a new cohort of players to the world’s largest gambling hub. They’ve helped boost revenues at casino operators like Wynn and Sands. This new mass market will help Macau’s gaming-centric economic model stay at the table longer.
Guest view: Japanese maverick bucks ROE revolution 25 Jan 2018 Just as corporate Japan starts to take return on equity seriously, a famed entrepreneur is headed off-course. Rakuten’s push into mobile under boss Hiroshi Mikitani will destroy shareholder wealth and shows up another supine Japanese board, argues investor Kisalaya Singh.
Uber plan highlights SoftBank’s addiction to debt 25 Jan 2018 The Japanese group might raise funds by borrowing against its shares in the U.S. ride-hailing app, or in British chip designer ARM, a report says. That’s plausible: SoftBank prefers maximum financial firepower. Extra layers of leverage will introduce fresh complexity and risk.
Weed giants share a deserved peace pipe 24 Jan 2018 Canada’s Aurora and rival CanniMed have agreed a friendly merger after months of acrimony. CanniMed’s shareholders only get a small stake in the $6.2 bln combination, but a big uplift in value. The world’s biggest listed weedmaker is now well positioned for regulatory changes.
SandRidge dares Icahn to up the ante 24 Jan 2018 The $690 mln energy company is dropping the controversial, shareholder-unfriendly wolf-pack clause it used to try to defend a now-ditched merger. But it’s not yielding much on the activist’s other demands. That may prompt Icahn to target more than just poison pills and directors.
Hadas: Carillion and the danger of low prices 24 Jan 2018 Debt-heavy UK contractor Carillion collapsed because it wasn’t charging enough. Uber can keep distorting taxi markets with loss-making fares until its backers lose hope. And Amazon’s cross-division support unfairly harms competitors. Cheap prices can cause expensive trouble.
Banks have new reasons to fear digital disruption 24 Jan 2018 Wannabe fintech disruptors are out in force at Davos. Regulation and poor returns helped protect big lenders up to now. Renewed interest in financial services from the likes of Amazon and Apple poses a bigger threat. Banks will need to either join forces or partner with Big Tech.
U.S. tax cuts pile on pressure for GE to shrink 24 Jan 2018 They should help, long term. But a big charge contributed to a whopping $9.8 bln fourth-quarter loss at the conglomerate, whose top line also declined. Cost cuts and cash-flow gains buy CEO John Flannery breathing room, but the breakup option is looming increasingly large.
Mnuchin opens door to new era of currency wars 24 Jan 2018 The U.S. Treasury secretary said a weaker dollar was good for his country in some ways. True, but the break with what his predecessors have asserted since 1995 raises the risk the greenback will be used as a trade weapon. That would be bad news for foreign holders of U.S. debt.
EU makes Qualcomm bid more attractive, less likely 24 Jan 2018 Regulators fined the company $1.2 bln for paying Apple not to buy chips from its rivals. Such levies reduce Qualcomm’s potential profitability, and make a $105 bln bid from rival Broadcom more alluring. Yet it suggests trustbusters may look askance at the combined firm’s power.
Breakdown: Why Steinhoff’s complexity may save it 24 Jan 2018 An accounting scandal has exposed the retailer’s warren-like structure. Creditors who are owed close to 11 billion euros face a fight for repayment. But the prospect of a messy restructuring may help keep Steinhoff afloat for now. Breakingviews offers a guide through the maze.
Suez public sector blowback makes for sorry trend 24 Jan 2018 Shares in the French water group fell 16 percent after a profit warning. Utility-like groups with long-term public contracts typically enjoy a low cost of capital. But having governments as clients is no safeguard, as Veolia and Carillion have already shown.
UK pension watchdog needs new tools, and backbone 24 Jan 2018 Prime minister Theresa May vowed to punish groups that fail to protect retirement benefits, like collapsed outsourcer Carillion. New tools could include fining companies or curbing payouts. But the regulator can do more with the powers it already has to make companies fill gaps.
Perfect storm blows ill winds across Chinese tech 24 Jan 2018 Hubris, margin loans and starry-eyed investors have led to a cash crunch at $9 bln Leshi. The video-streaming and smart-TV arm of embattled LeEco is now chasing its founder, "China's Steve Jobs," for money he owes it. Bad behaviours that converged here will turn up elsewhere too.
Chinese gadget-maker IPO tracks Xiaomi hype 24 Jan 2018 Huami, China's answer to Fitbit, is aiming to go public ahead of a blockbuster share sale by the handset maker. It just turned a profit, thanks to growth powered by cosy ties to Xiaomi. Western hardware companies have disappointed investors, but they also didn't have an X factor.
Canada’s insurance policy on NAFTA isn’t loony 23 Jan 2018 Negotiators have opened talks on revamping the trade pact, but their chances look slim. A U.S. pullout from NAFTA would affect Canadian exports amounting to nearly 20 pct of the country’s GDP. But Ottawa has other trade pacts in the works, and a flexible currency would help cushion any blow.
Tesla board drives CEO pay into electric dreamland 23 Jan 2018 Elon Musk will make nearly $60 bln if he hits new targets by 2028, on top of the $100 bln-plus value boost for his existing stake. Musk is critical to Tesla, and he blew through his last goals years early. The new ones are even more ambitious. But incentives can lose meaning.
The Twitter egg is not a management strategy 23 Jan 2018 The $17 bln social network is splitting its chief operating officer role among other managers, after Anthony Noto took flight to run lender SoFi. With revenue falling and government scrutiny intensifying, moonlighting boss Jack Dorsey needs a solid executive, not a blank avatar.
Elliott finds another target for its power play 23 Jan 2018 FirstEnergy shares spiked after a $2.5 bln capital injection from the activist hedge fund and others. Elliott is reprising a ploy that made NRG the best performer in the S&P 500 last year. That deal had hiccups though, and the latest one will too. Shareholders should buckle up.
Jamie Dimon’s $20 bln investment is pitch-perfect 23 Jan 2018 JPMorgan is boosting wages, branches, lending and philanthropy, all partly thanks to U.S. tax cuts. The plan makes the Trump administration look good. But the lender had the wherewithal to do most of it already. And shareholders will benefit most from Uncle Sam’s largesse.
Spotify puts IPO bankers on “disruption” playlist 23 Jan 2018 The music-streaming service may list its stock in New York without raising money or using underwriters. With private funding plentiful and business models asset-light, other tech groups could follow. It’s another threat to the high fees U.S. banks charge to take companies public.
P&G’s razor burn calls for radical salve 23 Jan 2018 The Pampers-to-Gillette maker’s sales grew 3 pct in the second quarter. But that’s in spite of continued attrition in its grooming division. P&G is selling more blades but making less money. As activist Nelson Peltz joins the board, P&G’s razors look increasingly disposable.
Verizon and Comcast look to play catchup in M&A 23 Jan 2018 The telecom and cable giants appear smaller in the rear-view mirror of Disney’s $52 bln Fox deal. They are unlikely to stand still for long. AOL and Yahoo haven’t done enough to up Verizon’s content game, while a merger could fulfill Brian Roberts’ wireless ambitions at Comcast.