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 Many regulations are outdated for the likes of Airbnb and Uber, but a more cooperative attitude would help their cause.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.
BofA gives investors more to fear than cheer 15 Oct 2014 CEO Brian Moynihan has hit cost-cut targets early. Several units are performing well. Strip out the $5.3 bln mortgage settlement, though, and BofA still has high costs and low returns. Recent economic jitters may also mean a needed boost from higher interest rates is receding.
AbbVie U-turn shows Shire was mostly about tax 15 Oct 2014 The American group has cooled on a $55 bln bid for its UK-listed peer. The change of heart was prompted by U.S. opposition to “inversions.” That shows how much, despite AbbVie’s earlier protests, this deal was driven by tax. A recut takeover looks unlikely.
China theme parks are an investment rollercoaster 15 Oct 2014 American operators including Universal Studios are eyeing the People’s Republic. Chinese households are forecast to spend $4.2 billion on fun fairs by 2018. But the worry that weaker consumer spending could rain out growth hopes is already hitting valuations of local groups.
World’s largest bank glimpses dark side of success 14 Oct 2014 Shareholders dinged Wells Fargo’s $260 bln market value after the lender had to rely on outsized venture capital gains and a low tax rate to meet third-quarter estimates. Income may not be the consistent record breaker it once was, but Wells still beats rivals on most metrics.
Cloud companies rain money on insiders 14 Oct 2014 Remote storage and software providers like Salesforce and Splunk generate hefty losses mainly because they issue tons of equity to employees. Investors don’t mind, believing the sun will come out tomorrow. The only certainty, though, is they’re being soaked with dilution today.
Jamie Dimon returns to challenges old and new 14 Oct 2014 JPMorgan’s boss is back after cancer treatment. But results missed estimates thanks to legal and other costs. The investment bank is punching below its weight. Cybersecurity is a growing worry. Even the timing of the bank’s earnings release was off. Dimon has his work cut out.