Defense-minded Lockheed plays strong offense 20 Jul 2015 The U.S. arms supplier has struck a solid deal to buy the Sikorsky helicopter business. A big tax break reduces an already reasonable headline price of $9 bln. Lockheed’s plan to spin off or sell other less profitable units further attacks the problem of a leaner Pentagon.
Netflix saps "Mr. Smith Goes to Washington" act 17 Jul 2015 The online streaming service has become a power broker in the U.S. capital, positioning itself as an idealistic advocate for the little guy. It helped crush Comcast’s bid for Time Warner Cable, but now supports Charter’s. What’s good for Netflix, however, may not be good for all.
Uber has right on its side in New York City scrap 17 Jul 2015 The $50 bln ride-hailing app giant doesn’t help itself with its attitude to rules that hold back its business. And congestion in the Big Apple is a real concern. But Mayor Bill de Blasio’s plan to cap car-service growth pending study is just too convenient for the taxi industry.
Conoco’s shrinking ambitions may make it a target 17 Jul 2015 Low oil prices and heavy debt are forcing the $71 bln U.S. driller to sacrifice deepwater exploration for a higher share dividend and less risky projects like shale extraction. Unless crude rebounds, more diversified rivals like Chevron and Exxon could be tempted to pounce.
Google’s new CFO recalibrates investment algorithm 16 Jul 2015 Ruth Porat uttered a few words about capital discipline to accompany solid quarterly results. Fears over profit bummers, R&D moon-shots and Facebook’s mobile prowess quickly ebbed, as Google’s market value leapt by $40 bln. It’s a high new standard for boss Larry Page to honor.
Travel deal treads new path for shell companies 16 Jul 2015 Blank-check vehicles have often brought financial misadventure. The latest quest for success is the acquisition of Lindblad, a National Geographic-linked operator of cruises to the Galapagos and Antarctica. New terms and investors suggest so-called SPACs are worth revisiting.
U.S. colleges would gain from bankruptcy electives 16 Jul 2015 Financial trouble at nonprofit Sweet Briar and for-profit Corinthian Colleges has shown there’s no practical path out of insolvency. That’s bad for students. With hundreds of institutions short of money, it’s also a multibillion-dollar risk for the student loan system.
Goldman for once may miss mega-bank sprawl 16 Jul 2015 Legal costs whacked the Wall Street firm’s Q2 earnings. More worrying was the far worse showing than rivals in fixed-income trading. Broader institutions such as Citi, BofA and JPMorgan gain a cushion from areas like treasury services. Goldman’s focus isn’t always an advantage.
Ultra-efficient Citi needs efficient returns 16 Jul 2015 The banking behemoth is now second only to U.S. Bancorp in keeping costs down. But it’s nowhere near its smaller rival’s market-leading return on equity. Offloading its remaining toxic assets and using more of its tax breaks will help. But that’s a slow process.
Chicago’s financial lessons will outlast Detroit’s 16 Jul 2015 The Motor City’s slide into bankruptcy was inextricably linked to the troubles of the car industry. Chicago has no such excuse for its mangled finances, and may not be able to shed debt in court. For policymakers, the Windy City offers a more apt cautionary tale than Motown.
U.S. banks lay bare irrational investor exuberance 15 Jul 2015 BofA and U.S. Bancorp stock shot up even though neither lender’s core earnings beat estimates. It reflects BofA’s cost cuts, U.S. Bank’s loan-growth plans and industry hopes for higher interest rates. None, though, does enough for the bottom line to justify the enthusiasm.
Macy’s will struggle to resist real estate sale 15 Jul 2015 Activist fund Starboard has bought into the $23 bln U.S. department store chain, earmarking the company’s property holdings as a source of value. Spinning off buildings is a hot trend, and the numbers add up for Macy’s. The long-term risks, though, shouldn’t be discounted.
Santander puts JPMorgan stamp on U.S. business 15 Jul 2015 Blythe Masters’ appointment as chair of the Spanish bank’s auto lender leaves the Wall Street bank’s alumni in four of the top roles in its U.S. units. Masters isn’t an obvious choice. But the hire shows group CEO Ana Botin, also ex-JPMorgan, is serious about fixing the business.
U.S. graft case replete with muni market lessons 15 Jul 2015 The ex-mayor of Harrisburg, in office for 28 years, faces 499 criminal counts for theft, bribery and other sins, some relating to ill-judged borrowing that led to the city going bust. Whatever the outcome, officials and investors share blame for letting an imperial CEO run amok.
BofA earnings best in years but tougher task ahead 15 Jul 2015 The bank run by Brian Moynihan cranked out a second-quarter profit of $5 bln as costs hit their lowest level since 2008. Return on equity remains subpar, though. Without some one-off extras, BofA’s core earnings would need to rise almost 40 pct to beat its cost of capital.
Fund managers beat banks in anti-regulation tussle 15 Jul 2015 Regulators look unlikely to slap a too-big-to-fail tag on the world’s biggest asset gatherers. That’s a lobbying victory for the likes of BlackRock, but it’s also the right call. Systemic risk stems from leverage and maturity transformation. Fixating on size is a distraction.
Biotech feeds on itself with $7 bln Celgene deal 15 Jul 2015 The cancer drug giant is scooping up Receptos for 16 times its 2013 float price. The target has promise but no approved drug, yet Celgene’s market value rose by nearly $5.5 bln. With the bio bull market rewarding both seller and buyer, dealmaking is getting pumped up on steroids.
Wells Fargo shows lower earnings can be good news 14 Jul 2015 The bank’s $5.4 bln second-quarter profit needed some help to hit estimates. And returns, though better than most rivals’, are falling. That might sound like trouble brewing. But it’s more a sign that boss John Stumpf is eschewing riskier business for stable earnings.
Pluto and pentaquarks boost non-profit science 14 Jul 2015 NASA’s distant mission has gone viral, while European researchers have accidentally proven a 50-year-old theory about matter. Open-ended research at, say, Google is valuable, but government-funded basic science offers unmatched intellectual gains and unexpected practical benefits.
Mexico oil sale can handle underwhelming start 14 Jul 2015 The government may award just a handful of 14 contracts on offer as it starts to open up the sector. That’d be no disaster. State-owned Pemex and others are waiting for richer pickings. And Mexico is adapting to investor concerns. A goal of $50 bln of investment may yet happen.