Amazon points profit-incinerating ray at the sky 31 Jul 2020 Jeff Bezos’ $1.6 trillion firm will spend at least $10 bln to build a global broadband satellite network. Elon Musk’s SpaceX already has similar plans. Customers may benefit from the rivalry, but if the earthbound tech sector is a guide, it’s not clear that either company will.
M&A firms’ big fear is Fed-fueled fee doldrums 31 Jul 2020 Lazard, Evercore and others held up better than expected last quarter, thanks to restructuring work and robust capital markets. But if economies stumble, the uncertainty will hit M&A, while liquidity gushing from central banks could limit how many troubled firms need help.
Exxon boss drills deeper into strategic hole 31 Jul 2020 Darren Woods' business is already more indebted and capital intensive than Chevron or ConocoPhillips. Now he wants to slash costs to save Exxon's annual dividend. It's unsustainable even in purely financial terms: The $177 bln oil major’s performance no longer supports it.
Corona Capital: Pinterest, Tech heaven 31 Jul 2020 Concise views on the pandemic’s corporate and financial fallout: Pinterest offers a window into advertisers’ souls, while tech giants’ valuations soar.
Tricky bidding war brews over LSE’s Italy bourse 31 Jul 2020 The London exchange may sell Borsa Italiana or the unit’s stake in the MTS bond trading platform to win EU approval for its $27 bln Refinitiv bid. Likely buyers Euronext and Deutsche Boerse would find themselves in a messy three-way tussle if Rome weighs in with a domestic bid.
IAG’s capital raise buys limited flying time 31 Jul 2020 The British Airways owner is tapping investors for 2.8 billion euros of equity. But the carrier is burning through 800 million euros of cash each month. Unless restrictions in its three biggest markets lift soon, a government bailout may be the only way to avoid a rough landing.
BNP’s bad debt buoyancy upends market pessimism 31 Jul 2020 The $51 bln French bank reported a 19% half-year profit decline, mitigated by robust trading. That adds credibility to CEO Jean-Laurent Bonnafé’s boast that 2020 earnings will drop by only a fifth. If loan losses stay modest, the shares could climb much closer to book value.
NatWest has a new name but old task: cut costs 31 Jul 2020 Alison Rose, CEO of the bank formerly known as RBS, wants to report a return on tangible equity of 9% to 11% over the “medium to long term”. Since rock-bottom interest rates will make revenue growth tough, she’ll have to take a large axe to expenses – much like her predecessors.
Amazon is jack of all trades, master of all too 30 Jul 2020 The e-commerce giant’s revenue jumped 40% in the quarter, with lockdown-friendly online shopping driving growth. But people are streaming more TV and video, and businesses are spending more on Amazon’s cloud. Amazon’s dominant reputation – and multiple – is for good reason.
Alphabet’s moonshots are falling back to earth 30 Jul 2020 The $1 trln Google parent is struggling more than rivals. Second-quarter revenue fell by 2% while Facebook's sales increased. The maturing business faces more ad competition. And the non-core projects that were once intriguing these days look more like dead weights.
Apple flying in ever thinner air 30 Jul 2020 Tim Cook’s firm had a reasonably good quarter, but its valuation has ballooned this year to $1.6 trillion. It is hanging onto the coattails of other giant tech firms, which investors view as beneficiaries of the pandemic. But its rising peers are carrying Apple too high.
Viewsroom: Silicon Valley spotlight 30 Jul 2020 The CEOs of Big Tech companies faced off against U.S. lawmakers during an antitrust hearing that raised new evidence about past acquisitions. Meanwhile, Japan’s Ootoya and Colowide engage in a food M&A fight. And: SoftBank CEO Masayoshi Son’s next steps.
Ecuador spat reveals sovereign-debt market cracks 30 Jul 2020 Investors are suing to halt the country’s $17.4 bln restructuring, claiming it’s hoodwinking bondholders. They have a point. Going to court is a long shot, but Ecuador’s tactics will hurt its market-friendly makeover. And it may prompt an overhaul of how countries borrow, too.
Market election jitters have a special Trump twist 30 Jul 2020 Some money managers are wondering if U.S. President Donald Trump might dispute the outcome of a November vote if he doesn’t win. That would unleash asset price ructions. Buying protection will be pricey: there’s already a hefty election premium embedded in currency options.
P&G cleans up nicely but doesn’t yet shine 30 Jul 2020 The company behind kitchen-paper brand Bounty grew its sales as customers waged war on dirt. Revenue grew 6% in the fourth quarter, faster than P&G’s annual target. Wipe away the effect of strange times, and P&G ended up more profitable too – but only a little.
Kraft boost may be more than a flash in the pan 30 Jul 2020 Higher sales of peanut butter and Velveeta could help the U.S. food giant out of a sticky situation – it’s more indebted than peers. Gains induced by pantry hoarding probably are temporary, but Kraft is also now talking about growth, something that was missing from its recipe.
At least U.S. GDP trajectory is a known unknown 30 Jul 2020 Output crashed at a 33% annual pace in the three months to June. The current quarter looks less bad. The size and durability of gains in activity and jobs are, though, anyone’s guess. Real-time data speeds measurement. And the Fed, and especially Congress, can shift the outcome.
Corona Capital: Ford narrows the gap 30 Jul 2020 Concise views on the pandemic’s corporate and financial fallout: The Detroit automaker put in a better second-quarter performance than expected. That’s good news for under-pressure CEO Jim Hackett – and allows Ford to close some of the distance to rival GM.
Credit Suisse takes right leaf out of rival’s book 30 Jul 2020 CEO Thomas Gottstein will cut costs and deploy more capital in wealth management. A slimmer investment bank would make the lender look more like UBS, which has a higher valuation. To close that gap faster, the new boss could hand savings to investors instead of reinvesting them.
Weakened Shell offers dim hope for pre-virus glory 30 Jul 2020 The $122 bln oil major’s sales fell nearly two-thirds in the second quarter, as the pandemic hurt crude prices. A dividend cut looks prudent. But a legacy of high debt, less investment and weak demand for fossil fuels mean investors are unlikely to see fat payouts restored soon.
VW’s China acceleration leaves Renault in the dust 30 Jul 2020 An uptick in Middle Kingdom car sales helped Volkswagen boss Herbert Diess restate a pledge to make an annual profit, following a half-year loss. By contrast, the French carmaker is losing money and market share. New Renault CEO Luca de Meo’s cost-cutting plan needs more fuel.
AB InBev jumps a very low bar 30 Jul 2020 The $95 bln drinks group reported a smaller-than-expected slump in second-quarter sales. Improved performance in June was down to restocking but the rebound will be slow. While pubs are reopening, coronavirus-wary drinkers aren’t returning in droves. Real cheer is some way off.
Mumbai’s slums test lockdown logic 30 Jul 2020 Nearly 60% of people in densely packed areas have had Covid-19, a study found, suggesting a low fatality rate. About 40% of the Indian financial capital's residents live in similar settings. The city’s strict shutdown may now be impoverishing more than protecting the poor.
Elon Musk’s supply-chain dream might come true 29 Jul 2020 The Tesla boss says the company is willing to provide rivals with batteries, powertrains and self-driving software. That may appeal to startups and even some traditional automakers. As with other Musk projects, though, Tesla-as-a-parts-service will take time to become reality.
China’s economic recovery looks squiggle-shaped 30 Jul 2020 Budweiser, KFC and Rio Tinto point to reviving sales in beer, fried chicken and steel. Industrial profit is up too. But the rebound is unevenly distributed across sectors and regions, and employers are still shedding jobs. As pent-up demand is sated, the optimism might fade.
Big Tech bosses face hot air and hard truths 29 Jul 2020 Bosses of Apple, Amazon, Facebook and Google faced a predictable array of silly questions during their Washington hearing. But they also faced some pointed examples of their firms throwing their weight around. Cook, Bezos, Zuckerberg and Pichai have some self-examination to do.
Ad problem shifts from newspapers to Facebook 29 Jul 2020 News organizations struggled as ads shifted to digital platforms like Facebook – which benefits from journalism but doesn’t pay for it. A new law could change that, helping newspapers but leaving the social network with a growing dependence on the one source proving tenuous.
Garmin’s cyber-attack lesson: sprint don’t jog 29 Jul 2020 The maker of sports watches and navigation tools fell prey to a hack less than a week before reporting earnings, and for days left users mostly clueless. There’s no one-size-fits-all way to handle complex cyber-incursions, but for future victims, being fleet of foot is a must.
TikTok deal depends on how, not how much 29 Jul 2020 Some of the social network’s investors have proposed buying it at $50 bln, or 50 times sales. That would suggest growth that vastly outpaces rivals like Snap. It’s possible, but with bans in places like India, TikTok’s worth depends on how cleanly it can cut ties with China.
GE’s recovery is stuck in the slow lane 29 Jul 2020 It burned less cash than boss Larry Culp feared in the second quarter – with help from the Pentagon – and while revenue fell 20%, its industrial customers are slowly regrouping. GE is chasing savings and lay-offs, but still seems to be shying away from more dramatic maneuvers.