Apple’s new, new things overshadowed by old thing 20 Oct 2014 The drumbeat for innovation banged on till the watch and payments technology finally appeared. In the meantime, it was iPhones that spurred better than expected revenue of $42 bln, accounting for 56 pct of the total. Apple’s one-trick pony will do until the herd picks up speed.
Two useful AbbVie inversions to pay for failed one 20 Oct 2014 Turning tail on the $54 bln Shire deal exposes the U.S. drugmaker’s folly chasing a lower tax bill. Investors facing a $1.6 bln break fee should push for other AbbVie flips: boss Richard Gonzalez’s compensation and the company’s governance in the form of an independent chairman.
U.S. mortgage watchdog risks subprime repeat 20 Oct 2014 New rules on federal guarantees clarify lending criteria. They also cut required down payments to 3 percent. That invites another wave of underwater borrowers. Sure, home ownership is down from its peak. But focusing on that, rather than prudence, helped inflate the last bubble.
U.S. Senate shift may give Wall St glimmer of hope 20 Oct 2014 Most polls suggest Republicans will take control of Congress in November’s election. Their possible slim majority won’t mean much for lawmaking. But chairing banking committees and the confirmation process could reduce some of the pressure on the financial sector.
IBM keeps earnings bug hardwired in system 20 Oct 2014 Investors zapped $13 bln off Big Blue’s value after the firm ditched its 2015 goal of making $20 a share and had to pay to get rid of its chip business. That’s not the worst of it. What’s worrying is that CEO Ginni Rometty is sticking with the same plan that has sent sales lower.
Morgan Stanley homes in on underwhelming target 17 Oct 2014 The Wall Street firm’s Q3 showing came in just shy of CEO James Gorman’s 2015 goal of a 9 pct return on equity. It’s the result of another consistent overall performance. But until the bank can find its way to more lucrative returns, it’s dullsville for the stock price.
Airbnb and Uber lack full spirit of sharing 17 Oct 2014 Most of the $10 bln home rental service’s New York listings are illegal, a top lawman has found. And Pennsylvania judges put the kibosh on the $18 bln taxi app. Many regulations are outdated for the likes of Airbnb and Uber, but a more cooperative attitude would help their cause.
Spreadsheet bungles alive and well in high finance 17 Oct 2014 No less a practitioner than Goldman Sachs double-counted some of Tibco Software’s shares in calculating the company’s value in a sale worth $4.3 bln – oops, sorry, $4.2 bln. The mistake probably didn’t change much. What’s telling is that no one spotted a fairly obvious blunder.
Chesapeake gets double win in $5.4 bln shale sale 16 Oct 2014 The U.S. gas driller’s market cap jumped 17 pct, or about $2 bln, after rival Southwestern agreed to buy some wells. The acquirer’s 11 pct share-price slide suggests the deal favors Chesapeake. But it also gives CEO Doug Lawler a one-shot fix for his company’s balance sheet.
U.S. food merger may choke on antitrust precedent 16 Oct 2014 Sysco says its $3.5 bln purchase of US Foods preserves local competition. Critics argue that’s irrelevant because the two operate nationally. Similar logic led watchdogs to nix AT&T’s $39 bln deal for T-Mobile US. They could find it hard to swallow the food distributors’ union.
Jammed exits amplify global market gyrations 16 Oct 2014 It’s the worst financial turbulence since the euro zone crisis. Waning economic confidence and contagious fear can explain some of the rush out of stocks and into safe bonds. The decline of active market-makers is magnifying the movements.
Goldman pulls every lever to make machine run 16 Oct 2014 Bankers and traders helped the firm increase profit 50 pct from a year ago. Investments like Tesla supplier Mobileye contributed, too. Socking away less for pay, though, provided the real fillip to 11.8 pct return on equity. In tough times especially, that’s how it should work.
Wal-Mart and Amazon have yet to blur one big line 16 Oct 2014 The U.S. mega-retailer is belatedly paring brick-and-mortar investment in favor of e-commerce. Amazon, meanwhile, plans to open its first storefront in a radical departure from two decades of online disruption. As strategies slowly converge, valuations may start to inch closer.
Megadeals like AbbVie/Shire invite arbitragedy 16 Oct 2014 Doubts over the $55 bln takeover have hurt Paulson, Elliott and other hedge funds. This caps a dismal half-decade for merger arbitrage. Bids have been scarce and spreads narrow. And the biggest, most investable deals often come with the worst political and regulatory pitfalls.
Netflix stock horror follows familiar script 16 Oct 2014 The film and TV streaming service lost $7 billion of market value after it signed up fewer new subscribers than expected. Even for one of the most-shorted and volatile stocks, a 25 percent decline is notable. And yet investors have seen this movie many times before.
Rampant market fear clarifies global divide 15 Oct 2014 A slump in 10-year U.S. Treasury yields and the evaporation of this year’s stock gains augur poorly for the Fed’s bond-buying exit. Yet the domestic economy has been improving. Slowing growth elsewhere presents the bigger worry. America’s central bank can’t do much about that.
Time Warner boss cunningly counterpunches Murdoch 15 Oct 2014 After deflecting an $80 bln takeover bid from Fox, Jeff Bewkes is striking a blow to the whole pay-TV business model. Freeing HBO from the cable box was the highlight of Time Warner’s credible new growth plan. Rupert Murdoch and other moguls may be the ones on the defensive now.
Hold the victory lap on America’s shrunken deficit 15 Oct 2014 Treasury boss Jack Lew is bragging that his annual unpaid bills fell to $483 bln – more than Austria’s GDP. But this stems from badly structured spending cuts. White House resistance to needed reforms and Republican refusals to compromise leave America’s finances parlous.
Twitter, Tesla deserve salute for patent war truce 15 Oct 2014 Recent Supreme Court rulings clearly contributed to a 40 pct drop in U.S. infringement cases. But the Silicon Valley firms eased pressures to sue with efforts to share technology – and goose future demand. Others may finally be catching on to the attractions of a peace dividend.
Saudi supply games expose OPEC impotence 15 Oct 2014 The cartel’s swing producer is watching prices fall. Why? Maybe it’s trying to slow down U.S. shale growth, but that requires crude at well below $90 per barrel. Or it may want to cajole others into sharing painful production cuts. Either way, OPEC is too weak to control markets.