Big Tech’s growth story faces a one-two punch 26 Apr 2022 Inflation means advertisers and subscription clients have less money to spend at places like Google and Microsoft. Meanwhile, a tight labor market makes hiring more difficult and expensive. Without new business to sell or people to sell it, tech companies lose their shine.
GE braves cost inflation and confidence deflation 26 Apr 2022 The $99 bln machinery maker has weathered a slump in demand, only to be thwacked by supply chain and inflationary problems. Boss Larry Culp is ruthlessly cutting waste to offset things he can’t control. A 9% drop in shares suggests the market is losing patience.
UK fund manager picks canny time to do right thing 26 Apr 2022 The $10 bln Schroders is ditching its non-voting shares. A 37% discount to the voting stock helps smooth a deal without its dominant family losing out too much either. It’s a timely corrective to UK Chancellor Rishi Sunak’s efforts to lure more dual-share structures to London.
How Brooks ran into Warren Buffett’s arms 26 Apr 2022 The athletic-shoe company nearly expired while trying to compete with Nike and Adidas. Then Jim Weber stepped in and sharpened its focus to runners. The company’s boss explains in this episode of The Exchange how staying the course caught the attention of the Sage of Omaha.
Nomura’s malaise comes with dark silver lining 26 Apr 2022 More losses on old mistakes helped drag return on equity down to a dismal 4.3% in the last quarter. But they look almost over, the investment bank is holding up, and shares are outperforming fellow Archegos victim Credit Suisse. Retail pain shows there’s much work ahead.
Capital Calls: Maersk rides freight-rate M&A wave 26 Apr 2022 Concise views on global finance: The Danish shipping giant’s $19 bln of forecast free cash flow provides massive firepower for deals.
HSBC delegates shareholder value quest to the Fed 26 Apr 2022 The Asia-focused lender’s first-quarter pre-tax profit slid 27%. Pandemic curbs in Hong Kong and China aren’t helping. The bank still reckons it will hit next year’s returns target, but that’s less about its actions and far more about the U.S. central bank and peers raising rates.
Asia wealth slump renders bank hype a little rich 26 Apr 2022 UBS’s pre-tax profit from private banking in the region slumped 38% in the first quarter. Lockdown pains should ease eventually, but China’s “common prosperity” agenda may undermine the highly touted opportunity. Hiring blitzes by Citi, HSBC and others could be hard to justify.
Elon Musk buys Tesla a pounding Chinese headache 26 Apr 2022 The world’s wealthiest man is buying Twitter for $44 bln in the name of free speech. Beijing will lean on him to un-ban its troll army, then push him to comply with its extra-territorial sedition law. The profitable carmaker’s key Shanghai outfit risks being a pawn in the fight.
China data centres get handy M&A jolt from Beijing 26 Apr 2022 U.S.-listed Vnet and Chindata’s beaten-up valuations are already seeding takeover interest. The deals look opportunistic but a new government-led digital infrastructure push is a game-changer. That should allow rainmaking rivals to benefit even more from consolidation.
Twitter’s board hastily grabs $44 bln bird in hand 25 Apr 2022 Only 10 days after the social media firm bought time to seek other options with a poison pill, its directors have accepted Tesla billionaire Elon Musk's offer at its original value. That suggests board weakness, financial vulnerability, a lack of other bidders, or all three.
Netflix with ads is worth the change of heart 25 Apr 2022 A rare drop in subscribers helped make co-founder Reed Hastings open to a cheaper advertising-supported package similar to HBO Max. If Netflix can reap the equivalent of Spotify's ad revenue, it could add nearly 40% to its worth. With shares cratering, every bit helps.
What is Morgan Stanley smoking in Twitter LBO? 25 Apr 2022 The bank is leading a $13 bln debt package for Elon Musk’s buyout and lending $12.5 bln against his Tesla stock. Interest will eat up the social network’s cash flow and Musk may undermine its revenue. A good relationship with the world’s richest man may justify the risk, though.
Banks enter AGM season wearing green bullseyes 25 Apr 2022 Top U.S. lenders and some European rivals face votes on their climate policies at looming annual general meetings. Banks may resist greening their loan books if that hits earnings. But even if they clear the immediate hurdle, the heat will be on to clarify their net-zero plans.
Energy efficiency starts to attract the big bucks 25 Apr 2022 Brookfield’s potential $4 bln pitch for UK boiler repair group HomeServe sounds like small fry for a group with $690 bln of funds. But decarbonising buildings is a key growth area in the energy transition. Institutional investors are manoeuvring to ensure they don’t miss out.
Capital Calls: Britain’s beefed-up M&A watchdog 25 Apr 2022 Concise views on global finance: The activist building its stake in video-ratings firm Nielsen may face a potential snag, thanks to the UK’s answer to U.S. cross-border merger cop CFIUS.
Fallen casino kings have lessons for Blackstone 25 Apr 2022 If the buyout shop’s $6.5 bln bid for Crown Resorts succeeds, its executives will study founder James Packer and his former Macau partner. Lawrence Ho’s Melco group is struggling while Packer is exiting Crown after bad China bets. Even so, their examples point the way to success.
Macron’s easy election victory masks big challenge 24 Apr 2022 The French president has won a second term. It will be harder than his first. His party may lose its majority in parliament within months. And he will struggle to implement a bold and costly agenda in a divided country. His room for policy manoeuvre looks limited.
Musk wealth pours in as fast as Twitter can use it 22 Apr 2022 The Tesla CEO may need to find $33 bln more cash if he buys the social media company. That could require him to sell most of his shares in the electric-car maker that aren’t pledged against loans. But with more vast stock awards coming his way, it’s less risky than it looks.
Russia risk is ghost of banks’ sanctions future 22 Apr 2022 In the hunt for oligarchs and blacklisted firms, U.S. authorities are treating lenders as allies rather than adversaries. Prospective prosecutors may take a different view. Banks with past legal troubles might prefer to shun Russian business. Still, there are lots of grey areas.
European banks’ buyback boom faces bad-debt risks 22 Apr 2022 After two lean years, investors had hoped 2022 would bring bumper payouts from Barclays, BNP Paribas, and other big lenders. But the Ukraine war raises the chances of a recession. Rebuilding default buffers, which are slimmer than before the pandemic, may now be the priority.
Rwanda’s economic refit gets net-positive free ads 22 Apr 2022 Britain and Denmark want to outsource asylum processing to the East African nation infamous for its 1994 genocide. Regardless of their motives, it chimes with leader Paul Kagame’s plan to build an offshore services hub. Handling refugees looks mercenary but supports his goal.
Capital Calls: Gap falls through the inflation gap 22 Apr 2022 Concise views on global finance: Shares in the clothing retailer fell over 19% after the company warned of a sharper drop in sales and announced the departure of Nancy Green, the boss of its Old Navy unit.
China Inc has little to celebrate on Earth Day 22 Apr 2022 The annual environment-focused event gives titans like Alibaba a chance to showcase decarbonisation efforts. But since President Xi Jinping's net-zero emissions pledge, there has been little progress from China's biggest polluters. Greenwashing risks becoming the corporate norm.
Musk Twitter bid becomes less virtual, more risky 21 Apr 2022 The Tesla CEO says he’ll put up almost half the $46.5 bln needed to buy the social network and borrow $13 bln against his stock in the carmaker. Banks will lend $13 bln. If all goes well, he makes a private equity-style return. Twitter’s poor cash flow means lots could go wrong.
Twitter’s scarce suitors, Didi’s New York exit 21 Apr 2022 As Elon Musk dangles a $41 billion offer, Breakingviews columnists discuss whether anybody will end up buying the social network in this Viewsroom podcast. Plus, the Chinese ride-hailing firm cancels its U.S. listing less than a year after arriving, leaving shareholders stranded.
Explaining the Fed’s tolerance for high inflation 21 Apr 2022 U.S. prices are rising by more than 8% a year, yet the central bank only just started raising interest rates. One possibility is that it fears a financial crisis, Edward Chancellor argues. Another is that inflation is the least painful way to resolve deep-seated social conflicts.
Capital Calls: THG’s lowball bids 21 Apr 2022 Concise views on global finance: Britain’s 1.4 bln pound lipstick-to-protein-shake maker THG rejects “numerous” bids as it warns of higher costs.
Spendthrift Macron will hit harsh fiscal reality 21 Apr 2022 The French president must attract left-leaning voters to win a second term, and then a parliamentary majority. But financing pledges, like big investments in green energy, will mean choosing between higher taxes and worsening public debt levels. He’s likely to opt for the latter.
Italian motorway menu serves the Benettons well 21 Apr 2022 The dynasty may merge its Autogrill chain with $4 bln Swiss duty-free specialist Dufry. Though slightly bigger, the latter is suffering the worse Covid-19 hangover. Even though they’re surrendering control, the Benettons would still have a strong hand to get a good deal.