U.S. telecom titans may be mispricing an option 9 May 2017 Verizon trumped AT&T with a $2.3 bln bid for Straight Path, an owner of spectrum touted for 5G wireless service. The original 200 pct premium is now 400 pct. Many investors clearly underappreciated the security's value. There's a decent chance suitors are now overestimating it.
Deep-learning chips getting artificially inflated 9 May 2017 Circuitry first produced for videogames now powers advances in the hot field of self-learning computers. That has helped double Nvidia's market value to over $60 bln in less than two years. The fate of graphics chips in bitcoin and new developments at Google may hint at slower growth.
Toshiba and Western Digital need to get along 9 May 2017 The ailing Japanese giant has warned its U.S. partner not to derail the auction of a key chip unit. Toshiba needs a full price to offset its nuclear losses while Western Digital wants to buy the business in a fire sale. There's not much common ground.
Pandora shuffles furiously to find profitable tune 9 May 2017 The streaming-music service is getting a $150 mln injection from private-equity firm KKR. It’s also shaking up the board and exploring a sale as it struggles to stem losses and get listeners to pay. With Spotify eating its lunch with subscriptions, Pandora is waving white flags.
Private equity ups the ante in Permian race 8 May 2017 The industry has raised over $2 bln this year via blank-check entities to buy up energy assets, with TPG the latest to join the party. Exxon and Shell are also prowling for west Texas acreage. As prices climb, the special-purpose funds will have to be nimble to avoid a shakeout.
Chinese investor visas deserve extreme vetting 8 May 2017 The family of Donald Trump's son-in-law and adviser, Jared Kushner, apologized for using his name in a real-estate pitch in Beijing. The deal offers visas in exchange for $500,000 of investment. In questioning immigration, Trump hasn’t raised the EB-5 program. He should.
Canada’s subprime trouble is drama, not crisis 8 May 2017 A run on the Home Capital mortgage lender has eerie echoes of 2008. But structural strengths and regulatory awareness mean the Canadian financial system is far sounder than its neighbor's before the crisis. Still, high housing prices and consumer-debt levels are economic risks.
Coach pays luxury price to catch up with LVMH 8 May 2017 The U.S. handbag maker is plunking down $2.4 bln for Kate Spade, a figure not justified strictly by the numbers. But Coach's owners like the move to a multibrand portfolio, which has worked for LVMH and Kering. Mature luxury marques can no longer expect to succeed on their own.
Sinclair $3.9 bln Tribune deal puts Fox in a hole 8 May 2017 The U.S. broadcaster is paying a 26 pct premium for its rival after Uncle Sam relaxed a wave of regulations. Tribune gives Sinclair more heft to mount a challenge to Rupert Murdoch’s Fox News. But it’s going to cost the buyer more than just the headline price tag.
Akzo board has painted itself into a corner 8 May 2017 The Dutch paint maker’s categorical rejection of rival PPG’s 24.6 bln euro bid creates two glaring problems for boss Ton Buechner. His self-imposed targets are fanciful, and many shareholders doubt his judgement on the deal. Should PPG go hostile, two battles will become three.
Markets call Trump’s war bluff on North Korea 8 May 2017 Investors are ignoring the U.S. president’s war rhetoric against Pyongyang, snapping up South Korean securities and modestly buying protection against default. Optimism over the global economy and a new leader in Seoul result in a mute reaction compared to past flashpoints.
Buffett’s praise of Jack Bogle sounds self-serving 7 May 2017 At his annual Omaha gala, the Oracle gave a well-deserved shout-out to Vanguard's founder. With big slugs of Berkshire Hathaway's portfolio struggling, including Wells Fargo and IBM, returns are converging with the S&P 500. That makes Buffett's strategy look more like Bogle's.
Dan Loeb’s Honeywell spin goes too far 5 May 2017 Hiving off the $100 bln conglomerate’s aerospace unit could boost the stock. But the activist’s argument that it would increase shareholder value by a fifth is a stretch and ignores the benefits the unit brings to Honeywell. New CEO Darius Adamczyk has other levers to pull first.
Buffett halo-stripping compounds IBM’s pain 5 May 2017 Berkshire Hathaway investments serve as seals of approval for the market. They can be worth billions, especially to firms like Goldman Sachs and GE in the midst of a crisis. But sales by the Oracle of Omaha can send an ominous signal. Big Blue won’t be the last to feel the sting.
Millennial vigor helps drive U.S. employment gains 5 May 2017 U.S. employers added 211,000 positions in April, reducing the jobless rate to its lowest level in 10 years. Moreover, unemployment among young people is finally echoing the national picture as they are joining the workforce in bigger numbers. It’s a sign of a broadening recovery.
Review: Can we avoid another financial crisis? 5 May 2017 That's the question Steve Keen sets out to answer in his new book. He concludes that a capitalist economy can no better avoid another blowup than a dog can avoid attracting fleas. It’s only a matter of time. If the Australian economist is correct, we don’t have long to wait.
Cost cuts won’t save Pearson or its CEO 5 May 2017 The UK education publisher is planning 300 mln pounds of savings by 2020, with the troubled North America business taking some of the pain. Markets aren’t giving embattled boss John Fallon much credit for the plans, and falling revenue could cancel out the gain to shareholders.
Arconic board shoves head back in the sand 4 May 2017 Firing CEO Klaus Kleinfeld gave hope directors might embrace bigger strategic changes to improve results. Now they’re contending the former boss had it right and that two new board nominations should be change enough. Its argument, like the outfit’s performance, is poor.
Viewsroom: Apple starts iPhone birthday bash early 4 May 2017 Lucre from apps and other services should get investors in the party mood ahead of the company’s iconic device turning 10. Big Oil gets buoyed by rising prices – and the New York Times by more readers. And Coach shows the retail industry how to cope with upheaval, up to a point.
IHeartMedia’s one big LBO hit gets an extended run 4 May 2017 The U.S. radio giant has muddled through a 2008 mega-buyout largely because of looser terms on $20 bln of debt. IHeartMedia isn't sure now if it can survive another year. As Bain and Thomas H. Lee fight to save their investment, creditors keep playing the same covenant-lite song.