Infected supply chains challenge Big Tech defenses 4 Oct 2018 Apple and Amazon both denied a report they had installed servers harboring compromised chips. It speaks to a problem with global manufacturing. Ensuring the purity of goods made far from end users is difficult, especially across borders. The alternative is to make less profit.
Cox: Wooing of GE is lesson for wannabe Amazon HQs 4 Oct 2018 Lured by inducements and hangars for its CEO’s jets, the group quit Connecticut in 2016 for Boston. GE has since incinerated over $150 bln of value and shed businesses, leaving less for its new home. Yet it continues to inflame politics in the place it left. Bezos buyers beware.
Blackstone tries small dose of new growth drug 4 Oct 2018 Buying Clarus, which finances biotech and pharma trials, is outside the buyout giant’s comfort zone. It’s riskier than taking over mature businesses with steady cash flows. The deal is modest in size, though, and as drugmakers look to outsource, could be a useful petri dish.
Danske’s best-case scenario may be a painful fine 4 Oct 2018 The Danish bank said it faces a U.S. criminal probe over suspicious payments in Estonia. That raises the risk that it could be blacklisted in America, which sank Latvian peer ABLV, or be fined. Even a plausible $5 bln hit would send Danske’s capital ratio below its minimum level.
M&A bankers better off hunting pheasant than elk 3 Oct 2018 The value of deals above $10 bln popped by 150 pct in the first nine months of the year. Some, like Comcast’s purchase of Sky, come with chunky financing fees. Still, the glory is spread less thinly on smaller deals, which are also growing quickly, and are easier to close.
Brazil choice is how far back to wind the clock 3 Oct 2018 Elections on Sunday will probably send Jair Bolsonaro, a far-right nostalgist for military rule, and Fernando Haddad, a surrogate for jailed leftist icon Lula, into a two-man presidential runoff. Either would serve Brazilians best by letting his angriest backers down.
Carmakers self-drive closer to Marchionne’s ideal 3 Oct 2018 Honda is buying a stake in GM’s autonomous vehicle unit. Daimler and Renault-Nissan may cooperate more on Autos 2.0. Joint ventures help with costs, but are tricky to run. Full-blown mergers, advocated by late Fiat Chrysler boss Sergio Marchionne, make longer-term sense.
Hadas: Why houses are not like pigs 3 Oct 2018 Farmers respond to high pork prices, so the hog cycle keeps turning. It’s different for housing. An excess of money, not a shortage of buildings, usually turns prices upwards. And the cycle reverses when the money runs out, sometimes because lenders take fright at new supply.
Credit Suisse LBO defence is a hostage to fortune 3 Oct 2018 The Swiss bank’s asset management arm lauded the attractions of the leveraged loan market in a letter to clients last month, according to the FT. The pitch will do little to reassure those who are alarmed by the erosion of lenders’ rights and could backfire when the market sours.
Fiat car-parts sale needs private equity mechanics 3 Oct 2018 The carmaker may spin off or sell its Magneti Marelli unit. Handing it to shareholders would let them keep any upside. But the outlook for parts makers is mixed, and valuations low. Selling to the likes of KKR makes more sense, even if CEO Mike Manley has to accept a price cut.
There’s something off-key in Tencent Music’s IPO 2 Oct 2018 The Chinese web giant’s music service claims 800 million users, and super-fast revenue growth. It’s bigger than Sweden’s Spotify, and profitable too. But there are many gaps, like how it makes money, who those users actually are and what they’re prepared to pay for.
GE investors have been here before 2 Oct 2018 The conglomerate’s shares rose after it named Larry Culp as new CEO – much as they did after previous new starts. Once again, there’s room for disappointment. The weakness in GE’s earnings may go beyond its power division, and Culp may have to cut the dividend.
Amazon effect may extend to wages 2 Oct 2018 Increasing minimum pay to $15 an hour won’t do much for most of the e-commerce giant’s full-time workers but will help part-time and seasonal staff. It will raise pressure on rivals like Walmart and Target. And deflecting heat over boss Jeff Bezos’ wealth may be an added bonus.
Proxy plumbing is bigger problem than advisers 2 Oct 2018 The SEC has withdrawn its decade-old backing for the likes of ISS and Glass Lewis. Yet worries about the firms’ influence and potential conflicts are overblown. Modernizing proxy procedures would be a better way for the U.S. securities regulator to bolster shareholder democracy.
U.S. fritters oil stockpile at worst time 1 Oct 2018 While President Trump chides OPEC, his Iran sanctions are pushing up prices. Meanwhile the government is selling down its stockpile to plug a budget hole, not calm the market. With shale producers constrained, the White House should be more strategic with its crude reserve.
California boardroom gender quota is useful nudge 1 Oct 2018 A quarter of public firms based in the state have no women directors. Now they’ll have to change that, as some big investors already demand. Similar rules in Norway, say, have not obviously trickled down. But that may take decades – and board balance is a valid goal in itself.
Broken Akorn deal is exception to MAC rule 1 Oct 2018 Merger escape clauses are notoriously hard to trigger, but a judge has let Fresenius nix its $4.75 bln Akorn deal. Don’t expect many copycats. The case includes misconduct claims, and may yet be overturned. Corporate-friendly Delaware courts are loath to second-guess contracts.
Pfizer takes Hippocratic approach to governance 1 Oct 2018 The drugmaker has split its CEO and chairman roles, but undermined the impact by keeping boss Ian Read on as an executive chairman. Fortunately the $258 bln drugmaker’s pipeline puts it on a sound footing. Like much about Read’s strategy, at least the reshuffle does no harm.
GE brings life and meaning to the word culpability 1 Oct 2018 The stumbling industrial group replaced its newish CEO with former Danaher boss Larry Culp, while taking a $23 bln hit on its power unit. By holding John Flannery accountable and expunging his predecessor’s legacy of dealmaking, GE’s board has shown welcome, if belated, spine.
NAFTA is dead – long live NAFTA 1 Oct 2018 Canada and the United States agreed to update and rename the trade pact just in time for signing by the current Mexican government. Ottawa will open its dairy market and regional auto content will be increased. Supporters of the trilateral deal can breathe a sigh of relief.