Giving up the keys is Musk’s best Twitter option 17 Nov 2022 The billionaire admits he’s overworked running Tesla, SpaceX and the social media firm. His own blue-sky math suggests he’d be far better off financially by focusing on electric cars. Walking away from Twitter puts his $44 bln purchase at stake. But it's a small price to pay.
FTX affords a turning point in venture governance 17 Nov 2022 New CEO John Ray uncovered patchy balance sheets and signs of looting at the bust crypto exchange. What he calls “a complete failure of corporate controls” means users may not get repaid. Formidable backers like Temasek and Sequoia would be crazy to make the same mistakes again.
EY split presents a classic EY challenge 17 Nov 2022 Boss Carmine Di Sibio must sell his breakup plan to the accounting firm’s 13,000 partners. Like any consulting project, it has to solve a complex problem but be simple enough that stakeholders go for it. Objections from EY retirees are a reminder that consensus won't come easy.
UK’s new fiscal plan narrowly navigates recession 17 Nov 2022 As the economy shrinks, new finance chief Jeremy Hunt intends to raise taxes and cut spending. The 55 bln pound package goes some way to rebuilding Britain’s cracked credibility with investors. Delaying the pain by a few years could also help his party’s electoral prospects.
Murdoch deal will struggle to be fair and balanced 17 Nov 2022 Reuniting TV and tabloids may suit the media mogul, but others could be harder to sway. News Corp’s Aussie property portal accounts for 65% of its $10 bln value, implying big discounts on Dow Jones and the rest. It’ll take clever Fox spin to craft a merger shareholders support.
Capital Calls: Nexperia’s UK woes 17 Nov 2022 Concise views on global finance: The British government’s order to the Chinese group to sell its Welsh chip factory may prove an empty gesture without a plan to go forward.
Burberry revival rests on more leather power 17 Nov 2022 New CEO Jonathan Akeroyd wants to grow sales by 40% in coming years at the stagnating fashion house. Success hinges on star designer Daniel Lee’s ability to create alluring high-margin bags and shoes. But the move will take time and may hurt demand for items currently in store.
COP28 may make up for COP27’s shortcomings 17 Nov 2022 The global climate meeting has mostly failed to lure the same corporate big hitters as Glasgow did last year. In this Viewsroom podcast, Breakingviews columnists discuss how even if the gathering in Egypt’s Sharm El-Sheikh yields little progress, 2023 in the UAE could be better.
Crypto watchdogs have a giant offshore problem 17 Nov 2022 FTX’s collapse should trigger tougher oversight of digital-asset groups in the Unites States and elsewhere. Yet big players, like Binance and the $40 bln decentralised-finance system, may stay out of reach. Clearer rules could bring more business onshore, but not all of it.
Blockchain hype gets useful Aussie wake-up call 17 Nov 2022 Bourse ASX is pausing its much-delayed distributed-ledger clearing system and taking a $170 mln hit. The troubled project was beset by old-school problems like poor communication and planning. Such human flaws, though, bleed into how the technology gets developed.
Naspers swaps one Tencent headache for another 17 Nov 2022 The South African investor’s valuation discount to its $100 bln stake in the Chinese tech giant has narrowed since it started selling the shares to fund buybacks. But Tencent's plunging value is another factor. Though Naspers' prized asset has become a drag, exiting is tough.
Feedback loops power Elon Musk’s SpaceX 16 Nov 2022 Even as tech valuations fall, including that of Tesla, the rocket maker’s may rise 20%, to $150 bln. Its growing Starlink service is more appealing than lunar expeditions. The bigger the satellite business gets, the worse the economics become for rivals such as Amazon.
It’s the wrong time for Trumponomics 16 Nov 2022 The former U.S. president is trying to reclaim the job in 2024. He oversaw years of economic strength with tax cuts and deficit spending. But such policies put him at odds with the Federal Reserve even more now than before, and they don't meet today's challenges.
Scooterverse collides with financial reality 16 Nov 2022 Bird’s scooter-share business attracted investors on the understanding that it would disrupt transportation and eventually turn a profit. It got part way there, but the capital markets seized up before Bird really got going. Even good ideas can run out of road.
Estée Lauder plus Tom Ford is tricky defensive act 16 Nov 2022 The beauty giant will buy the fashion house for $2.8 bln. It allows the $81 bln group to cling on to the designer’s fast-growing fragrances, which it licenses. But outsourcing the eyewear and clothes units risks being a distraction, especially if Ford himself leaves after a year.
Tencent’s investor giveaway buys welcome respite 16 Nov 2022 The Chinese web giant is handing a $20 bln stake in food delivery firm Meituan to shareholders. The second such move in a year comes on top of increased share buybacks. The focus on boosting returns goes a long way to make up for slowing growth in Tencent’s video-game business.
Fiscal “black hole” obsession adds to UK problems 16 Nov 2022 Prime Minister Rishi Sunak’s government is set to tighten the public finances by about 50 bln pounds, equivalent to 2% of GDP. Yet the case for such a large package is based on dubious logic. If it’s front-loaded and overly reliant on spending cuts, it will also hurt growth.
India watchdog ire cools foreign banks’ ambitions 16 Nov 2022 It’s bristling at the idea of Europe’s regulators inspecting its clearing houses. The fallout could lump SocGen, BNP Paribas and others with costs making them uncompetitive. Throw in uncertainties in China, and India is giving bankers a new reason to consider an Asian retreat.
Capital Calls: American shoppers 16 Nov 2022 Concise views on global finance: Target blamed its ugly quarterly results on consumers pulling back on discretionary items even as fresh government data shows they keep buying loads of stuff.
Google owner makes a quixotic Chris Hohn target 15 Nov 2022 The billionaire’s TCI fund wants boss Sundar Pichai to slash pay, pare moonshots and repurchase more stock. Setting aside that Alphabet is controlled by its founders, its performance stacks up well against peers. There’s room to improve, but it also can afford to keep being bold.
Musk needs a third of America to pay for Twitter 15 Nov 2022 As the social media firm’s new boss says, it's losing $4 mln a day - before accounting for big drops in ad revenue. Even with cutting costs, sky-high interest means Twitter has to grow into its debt, which could require as many as over 110 million people to pay for the platform.
Walmart turns inflation into a land grab 15 Nov 2022 The $375 bln retailer is attracting higher earners with its lower prices, gaining market share in the third quarter. That’s leading to revenue growth despite the uptick in prices. But the makers of the soaps and snacks that Walmart sells are seeing their pricing power slip away.
Crypto readies itself for a post-FTX hose-down 15 Nov 2022 The collapse of Sam Bankman-Fried’s empire exposed the vulnerabilities of a vast, unregulated world of digital finance. Rivals like Circle CEO Jeremy Allaire hope to prove there’s a safer side of crypto worth saving. He presents his case in this episode of The Exchange podcast.
Capital Calls: Jeff Bezos 15 Nov 2022 Concise views on global finance: The Amazon founder is telling consumers to batten down the hatches. Yet the e-commerce giant has plenty of room to capture more online market share.
Vodafone’s misery strengthens Xavier Niel’s hand 15 Nov 2022 The 26 bln pound group’s shares sank 8% after it cut its profit forecast. CEO Nick Read’s efforts to streamline the sprawling telco are getting bogged down by rising costs and weak growth. His new shareholder, the Iliad founder, may push for faster disposals and deeper cost cuts.
Credit Suisse’s fuzzy Apollo deal better than none 15 Nov 2022 Boss Ulrich Körner is offloading $55 bln of assets in a securitised product unit, chiefly to the U.S. behemoth. Credit Suisse did not reveal the price, and it will pay Apollo to manage the remaining assets. But at least Körner avoided selling at a discount amid tricky markets.
Piyush Gupta might be banking’s boldest boss 15 Nov 2022 Buying banking assets is complex at the best of times. Singapore’s $65 bln DBS added a geopolitical twist when it agreed to acquire Citi’s Taiwan consumer bank. As tensions rise, Gupta is holding his nerve on the deal due to close next year. Then again, he has little choice.
Buffett places classic chips in $4 bln Taiwan bet 15 Nov 2022 His Berkshire Hathaway now owns 1.2% of TSMC. The semiconductor giant’s stock has taken a beating this year, in part on fear China might invade Taiwan, its HQ. But the company has a near-monopoly in cutting-edge tech. Such traits have long appealed to the Oracle of Omaha.
Zombie firms shuffle away from reckoning 14 Nov 2022 Carvana, Peloton and others assumed capital would always be plentiful. It’s not, and they continue to burn cash with business models that need work. Yet these larger firms, on average, have two years of money left. With cost cutting, many may survive, if not thrive.
Sam Bankman-Fried did financial system a favour 14 Nov 2022 The curly-haired cryptocurrency kingpin pushed regulators and politicians to legitimise assets like bitcoin. A few more years and his now-bankrupt exchange FTX would have burrowed deeper into mainstream finance, amplifying the damage. His downfall sends the process into reverse.