Americas

Microsoft is designated driver of the tech world

26 April 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 April 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 April 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 April 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.

WeWork junk-bond investors enable a contradiction

26 April 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 April 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 April 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 April 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 April 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 April 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 April 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.

U.S. squeeze could rally China tech behind Beijing

26 April 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.

Ford finally gives GM something to think about

25 April 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 April 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 April 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 April 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 April 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.

Twitter’s international flight may prove fleeting

25 April 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.

Hadas: Debt overload is an easy problem to solve

25 April 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.

Sky upside depends on Disney-Fox irrationality

25 April 2018

Brian Roberts’ Comcast formalised a $31 bln bid for the UK group. Rival suitors Bob Iger and Rupert Murdoch, of Disney and Fox, will struggle to match the U.S. cable giant’s synergies. Sky investors betting on a counteroffer must hope the media moguls ditch financial logic.