Electrolux buffeted by perfect Trump tariff storm 27 Apr 2018 The Swedish fridge maker lost a tenth of its value after operating profit almost halved in the first quarter. A rejig of its freezer factories in the U.S. was one culprit. But investors are dubious that cost cuts will enable such a global business to offset higher steel prices.
Jakarta is in a bind over interest rates 27 Apr 2018 Indonesian stocks are sliding alongside the rupiah, as higher U.S. yields prompt investors to sell out. But growth is tepid in Southeast Asia’s largest economy and an election looms. So the central bank is unlikely to follow through on talk of a hike, unless conditions worsen.
Australian hospitals operator given LBO lifeline 27 Apr 2018 An unwanted $3.1 bln offer values Healthscope only a bit higher than its 2014 IPO price. The deal is also being led by the same buyout executive who bought and sold the company for TPG. Healthy skepticism is warranted, but there's a chance to be discharged without further injury.
Review: China experts enter their own “New Era” 27 Apr 2018 Two new books from respected scholars try to make sense of the country under Xi Jinping. Both see it fast moving toward a more centralised political regime, with messy and probably unpredictable consequences. As interesting is the shifting mood among China analysts themselves.
Baidu’s revival adds speed to China’s AI race 26 Apr 2018 Quarterly earnings at China’s search giant topped $1 bln, trouncing expectations. Sales at its listed video arm, iQiyi, also jumped. Baidu may have been eclipsed by rivals like Alibaba, yet progress in autonomous driving is giving it an early lead in tech's next battlefield.
Microsoft is designated driver of the tech world 26 Apr 2018 The tech giant is vying with Amazon to be the planet’s second-biggest firm by market value, at around $730 billion. Microsoft looks dull, but the predictability of its earnings under Satya Nadella has helped its shares outperform Apple, Alphabet and Facebook.
SoftBank-backed fintech slaps on smart M&A patch 26 Apr 2018 Online lender Kabbage is buying analytics firm Orchard, whose investors include Wall Street chiefs Vikram Pandit and John Mack. The deal is more about adding data than revenue, but that shows fintech lenders are starting to put profit and customer retention ahead of rapid growth.
Decline is comfortable for U.S. asset managers 26 Apr 2018 Volatility isn’t rescuing listed money managers: most had fresh asset outflows in the first quarter. Yet the industry’s high margins, a clamp on expenses and growth in areas like so-called target-date funds kept profit flowing. The sector’s erosion is mercifully glacial.
Amazon is getting bigger, but also heavier 26 Apr 2018 Jeff Bezos’s firm made $51 bln in quarterly revenue. Sales have more than doubled in five years, but it’s taking more fixed assets to get there. Amazon now uses property and such with less efficiency than Walmart – just as its more traditional rival tries to go the other way.
Mario Draghi struggles to ditch post-crisis policy 26 Apr 2018 Euro-zone growth is slowing before the European Central Bank boss can end asset purchases or join the Fed’s Jerome Powell in raising rates. One-off factors may be to blame now but a downturn is inevitable. Unusual policy will be the norm rather than the aberration in Europe.
WeWork junk-bond investors enable a contradiction 26 Apr 2018 The trendy shared-office outfit is the latest firm with heady prospects and huge cash burn to tap credit markets. Like Uber, Tesla and Netflix, WeWork needs funds for expansion to justify its valuation. Yet the healthy cash flow creditors prefer may only come with slower growth.
ConocoPhillips shows way on cash discipline 26 Apr 2018 Higher oil prices are fortifying Big Oil’s finances, as the U.S. producer’s earnings confirm. CEOs have to balance buying new assets, beefing up balance sheets, and paying cash out to shareholders. Wasteful opportunities abound, and Conoco’s measured approach is worth mimicking.
Nintendo aims splat bomb at Japan’s gerontocracy 26 Apr 2018 The maker of hit video game Splatoon is getting a 46-year-old boss. That’s refreshing in an ageing country where seniority counts for so much. Youth can be a liability too, as evidenced by the growing pains of Uber or Facebook. But Nintendo’s business is a young man’s game.
Lazard and independent peers stuck in the middle 26 Apr 2018 Advisory firms hate being called “boutiques,” and justly so. The $7 bln Lazard collects more deal fees than Citigroup. But outgrowing the moniker still leaves them with the volatility of being fairly small, while adding the hiring problems of banks 10 times as large.
Diminished Deutsche Bank resembles cut-price BNP 26 Apr 2018 The German lender signalled the end of its global investment banking ambitions with cuts in the U.S. and Asia. New boss Christian Sewing plans to focus on Europe and more stable revenue sources. But low profitability hinders his plan to mimic continental rivals like BNP Paribas.
BP’s chairman pick is odd balm for old pay scars 26 Apr 2018 The UK oil major has picked ex-Statoil CEO Helge Lund to replace Carl-Henric Svanberg. Lund is a respected figure, but drew investor heat for his high remuneration when at BG Group. Given BP Boss Bob Dudley himself had a pay spat in 2016, it will raise investor eyebrows.
Barclays’ new vigour tempers calls for shake-up 26 Apr 2018 The UK bank earned an 11 pct return on equity in the first quarter, excluding 2 bln pounds of fines and charges. A revived investment bank vindicates CEO Jes Staley’s faith in the business. His next challenge is to re-stock capital buffers to clear the way for higher dividends.
VW’s new boss has $184 bln of low-hanging fruit 26 Apr 2018 CEO Herbert Diess kick-started an overhaul of the carmaker. Cutting jobs will be hard given VW’s union-heavy board. But by slashing the group’s excessive spending on materials like steel, Diess could squeeze suppliers instead. That would make a big difference to its thin margins.
Nomura targets are so close and yet so far 26 Apr 2018 Weighed down by a legal charge, the Japanese bank's annual profit fell 8 pct to $2 bln. At least there were encouraging signs in trading and investment banking in the last quarter. With earnings at just 62 yen a share, though, Nomura will struggle to reach a goal of 100 by 2020.
U.S. squeeze could rally China tech behind Beijing 26 Apr 2018 Like rival ZTE, Chinese telecoms equipment giant Huawei could also be in trouble over sanctions. The duo’s woes show how vital U.S. parts are to global supply chains. Beijing, which has long dreamt of self-sufficiency in technology, could enlist help from the likes of Alibaba.
China’s bad banks go on, even if bad bankers don’t 26 Apr 2018 Huarong is humbled as graft busters oust its chairman and confiscate passports. The company is part of an aging group that evaded obsolescence by turning into distressed asset investors. With $270 bln of bank loans gone sour, Beijing needs to keep bad banks around.
Ford finally gives GM something to think about 25 Apr 2018 The $43 bln automaker is scrapping most U.S. cars to focus on SUVs and trucks. That'll free up money and managers to tackle EV and self-driving challenges. It could leapfrog GM, which ditched its unprofitable Europe unit but still has plenty of unroadworthy models and divisions.
Facebook’s future could look like Microsoft’s past 25 Apr 2018 Tumbling valuations and regulatory attacks crushed the shares of Bill Gates’ software juggernaut two decades ago. Mark Zuckerberg’s social network is growing fast. But that’s no reason to assume that Facebook is immune to the same kinds of risks that challenged Microsoft.
Comcast is best leaving Fox to the Mouse 25 Apr 2018 Boss Brian Roberts says the cable company is open to acquisitions and he won’t use stock. But how he pays is less important than what he pays. Challenging Disney’s $66 bln deal for parts of Rupert Murdoch’s empire would be an expensive fight. Roberts is better off walking away.
U.S. industrial giants need to be better than good 25 Apr 2018 Boeing shares took off after the $200 bln plane maker beat forecasts and raised its outlook. Rivals with strong earnings that cast even faint doubt on the future, like Northrop Grumman and Lockheed, lost market value. With equities priced for perfection, investors are seeking it.
GE can get ahead of chairman-CEO trend 25 Apr 2018 The conglomerate defeated a shareholder proposal to separate the top jobs. But 41 pct of investors supported the measure, up from 24 pct a year ago. Double-titled boss John Flannery could pre-empt an embarrassing rebuke next year, and improve governance, by embracing a split now.
Deutsche revival depends on more than cost-cutting 25 Apr 2018 New CEO Christian Sewing has said saving 800 million euros this year is “non-negotiable”. Even if the German lender meets his cost targets, though, revenue must grow 5.4 pct a year for Deutsche to earn a decent return on equity by 2020. That’s hard to do while shrinking.
Twitter’s international flight may prove fleeting 25 Apr 2018 Strong overseas growth helped the social-media outfit boost sales by 21 pct in the first quarter. As Facebook has shown, it can be relatively easy to find people internationally to use a digital service. Making money on them, however, becomes progressively harder.
Nordea is safer on edge of Swedish property frenzy 25 Apr 2018 Aggressive new entrants have taken a chunk out of the Swedish bank’s mortgage share with hyper-low rates. Nordea and big domestic peers will feel tempted to join in to protect market share. That would be a bad idea – even if Swedish property values weren’t already falling.
Hadas: Debt overload is an easy problem to solve 25 Apr 2018 Three financial revolutions would be enough to bring down debt. Tax corporate debts, don’t subsidise them. Let the public share unearned gains on land. And replace government debt with newly printed money. These ideas may sound too radical – until the next mega-crisis arrives.