Amazon primes pump for Netflix showdown 18 Apr 2016 The $300 bln internet retailer has untied streaming video from its U.S. Prime service, suggesting its popularity is growing, perhaps to more than 70 mln American viewers by year-end. Netflix has more, but Amazon’s $8.99 monthly fee, undercutting its rival, signals a fight.
Negative rates turn up in useful spot: electricity 18 Apr 2016 Rising production of green energy combined with stagnant demand and the high cost of shutting down conventional plants is causing some producers to pay buyers to take power. Unlike the controversial central bank policy, this variety of negative rates has more clear-cut benefits.
Morgan Stanley growth plays 2016 version of Godot 18 Apr 2016 The Wall Street firm’s $1.1 bln Q1 showing makes it unlikely CEO James Gorman will this year hit his 10 pct return on equity target. Even giving investors all the bank’s excess capital wouldn’t do the trick. Cost cuts might help, but higher earnings are taking forever to arrive.
SunEdison burns new financial fad to a crisp 18 Apr 2016 The once high-flying solar company has engineered itself to the verge of bankruptcy. Its tantalizing but risky business model relied on selling assets to tax-advantaged spinoffs. So-called yieldcos may disappear over the horizon but the sun never sets on shortsighted greed.
Impeaching Rousseff is weak tonic for bad headache 18 Apr 2016 The vote to oust Brazil’s president from office makes a new, pro-business administration more likely. Stocks and the currency have already soared on the prospect. But the economy is a mess and the probable new government will be hobbled by protest and scandal.
Mike Corbat now entangled in banking Catch-22 15 Apr 2016 The Citigroup boss aced both the living will and stress tests. He also has fashioned an efficient operation, evidenced by Q1 results. To improve on a 6.4 pct return on equity, though, will require exhausting tax breaks. And to do that depends on finding more elusive profit.
Chancellor: Pensions are a bubble waiting to burst 15 Apr 2016 Bubbles are essentially illusions of wealth. So look no further than the gap between what pensioners have been promised and the assumptions about returns on their inadequate savings for a glimpse into the next source of financial fragility.
Obama kicks off antitrust rough ride out of office 15 Apr 2016 A record merger wave has decreased competition in the U.S. economy, encouraging the president to channel predecessor Teddy Roosevelt. Unpopular cable firms and expensive set-top boxes make a good first target. But technological change makes it tough to be a trustbuster today.
Cox: Who’s the Chinese buyer we’ve never heard of? 14 Apr 2016 That’s the question every investment banker now asks when selling a company or asset anywhere in the world. M&A advisers are even flying China specialists across oceans for pitches. Anbang-like hiccups won’t stop the trend. But extra due diligence and vigilance is required.
Millennial media run into age-old problems 14 Apr 2016 Fast-growing BuzzFeed fell short of last year’s sales goal and slashed this year’s, according to a news report, while Vice’s audience shrank and Time Warner-backed Mashable cut staff. Depending on ads and eyeballs is tough enough. And the new supply may now be exceeding demand.
Bank of America can use more self-help 14 Apr 2016 Its main units weathered the first quarter relatively well, partly because some expenses were kept under control. Overall, though, about 70 pct of BofA’s top line is spent on operations. If CEO Brian Moynihan can’t pare back, he’ll struggle to break free of dismal returns.
Wells Fargo at risk of losing its edge 14 Apr 2016 The big U.S. lender posted its lowest returns in years as Q1 loan growth slowed. It also just paid a record mortgage settlement, got low marks on its living will and is more systemically important. Chief John Stumpf has to show he can steer the stagecoach back to a smoother ride.
BP’s $20 mln Dudley payout looks crass but isn’t 14 Apr 2016 The oil major faces an uproar over Chief Executive Bob Dudley’s bumper remuneration package despite the company slashing jobs and recording losses last year. But the criticism may be unfair. Dudley has hit key targets and drawn a line under the Gulf of Mexico disaster.
Fed and FDIC fail living-will test too 13 Apr 2016 The U.S. regulating duo said five top U.S. banks delivered faulty plans. The assessment may be reasonable, but the way the long-delayed information was disseminated wasn’t. Botching a simple message in stable times isn’t a comforting sign for how watchdogs might handle a crisis.
Collapsed Peabody is ghost of oil future 13 Apr 2016 The largest U.S. coal producer filed for bankruptcy, felled by pollution concerns and declining costs of rival fuels. Oil companies may want to pay heed. Most of what they extract is used in transport. Falling electric-car and battery prices are canaries in the oil fields.
Verizon workers bolster unions’ cautious comeback 13 Apr 2016 The telecom company’s staff walked out in one of the largest U.S. strikes in years after contract talks stalled. Add a Supreme Court win, minimum wage hikes and a big role in presidential races, and organized labor may have a bright future. But there’s lots of ground to make up.
Billionaires go where no Excel nerd’s gone before 13 Apr 2016 U.S. entrepreneur Sean Parker is giving $250 mln to support cancer treatments, while Russian counterpart Yuri Milner spends $100 mln to explore the cosmos. It’s a refreshing switch from spreadsheet jockeys’ obsession with returns on capital. Bold bets can reap outsized rewards.
Banks can’t rely on lifeboats when Titanic sinks 13 Apr 2016 JPMorgan is among five big U.S. firms that failed the living wills test. That’s because they counted on liquidity from other subsidiaries that could be cut off from providing aid when things go awry. The regulators’ message to Wall Street is clear: every man for himself will prevail in the next crisis.
JPMorgan’s sprawl only helps so much 13 Apr 2016 The mega-bank credited diversification for a better-than-expected Q1 profit of $5.5 bln. Loans grew by almost a fifth as investment banking stalled. Energy borrowers kept JPMorgan from earning its cost of capital, however. It’ll take more than this to defend the business model.
Deals can help Japan’s banks offset dollar drought 13 Apr 2016 Mega-banks MUFG, SMFG and Mizuho are making new loans abroad faster than they can amass matching deposits. This headache has boosted the cost of swapping funds from yen to dollars, and made regulators in Tokyo wary. Buying smaller U.S. lenders would help reduce the mismatch.