Carlos Slim’s three-day workweek comes up short 22 Jul 2014 The Mexican billionaire wants to combine fewer weekly hours with longer working lives. That plan would waste the competence of the relatively young, while leaving many older workers with the wrong skills. Enhanced mid-life education would be a better use of leisure time.
Probing Congress’ insider trades worthy if doomed 21 Jul 2014 U.S. watchdogs say dozens of investors may have profited from an illegal Capitol Hill tip. Lawmakers are stonewalling, though, and the statute they passed to ban such leaks may be unenforceable. Even so, the case could shame Congress into getting serious about policing trades.
Green high-yield craze is too hot and full of wind 21 Jul 2014 The latest U.S. antidote to meager interest rates is the “yieldco” – collections of wind farms and solar plants. Demand is strong for the fledgling asset class, with six IPOs in a year. But ardor for the likes of NRG and TerraForm has driven valuations to unsustainable heights.
Controversy upending Dodd-Frank’s smartest goals 21 Jul 2014 Four years after the landmark financial regulation became law, some of its simplest ideas now seem complicated. Critics accuse the systemic risk council of opacity and bias. Living wills are proving cumbersome to implement. And Congress may have mucked up consumer protection.
EMC’s "federation" just a synonym for conglomerate 21 Jul 2014 The $57 bln data storage company is in the crosshairs of aggressive hedge fund Elliott Management. EMC says its “federation” enables subsidiaries including VMware to cooperate and create value. Growing competition between the parts and a valuation discount suggest otherwise.
AbbVie may find more than just tax charms in Shire 18 Jul 2014 The U.S. pharmaceutical group’s fifth offer, at $55 bln, finally persuaded its UK rival to sell. A 53 pct premium is a hefty price to pay given the modest synergies and potentially ephemeral tax arbitrage savings. Shire’s rare-disease drugs, however, should have lasting benefits.
Time Warner can justifiably hold out for more 18 Jul 2014 Though Rupert Murdoch’s $80 bln bid includes a 20 pct premium, his quarry may have been on track to achieve the offer price on its own. Time Warner also should be able to get more credit from the market for its growth. That gives boss Jeff Bewkes some negotiating power with Fox.
Review: Inside commodity traders’ "Secret Club" 18 Jul 2014 During the 2000s, speculating in commodities became the new fad, contributing to soaring prices and increased volatility, says Kate Kelly in a new book. She oversimplifies some of the dynamics of this complex world, but the powerful club she exposes should not be overlooked.
Alibaba’s fortune doesn’t depend on lucky digits 18 Jul 2014 The e-commerce colossus has moved its likely listing date from August to September, so will miss the “double 8,” numbers seen as charmed in China. Given its growth, Alibaba doesn’t need the gimmickry. And as Facebook learned, reaching for magic numbers in an IPO can backfire.
Too-big-to-fail is more than one-size-fits-all 17 Jul 2014 U.S. lawmakers are trying to stop the Financial Stability Oversight Council from designating any more non-banks as systemically important. That’s a heavy-handed response for large, interconnected firms that need monitoring. Even so, a more tailored approach would work better.
Medical upstart may help investors smell blood 17 Jul 2014 Theranos is applying Apple-meets-Tesla ambition to lab testing and phlebotomy. Though ordinary punters can’t buy into the Silicon Valley firm, already valued at $9 bln, believers in founder Elizabeth Holmes could short LabCorp or Quest. They’re also worth $9 bln each – for now.
Potent Russian sanctions show Europe the way 17 Jul 2014 Moscow markets tanked after the U.S. agreed new, tougher economic measures against Russia over its role in Ukraine. Sanctions work. The EU should remember that when announcing its own plan in a few weeks – unless Vladimir Putin offers an olive branch by then.
Morgan Stanley dangles sneak peak at prosperity 17 Jul 2014 The investment bank run by James Gorman relied on a whopping $600 mln second-quarter tax break to generate its best return on equity in years. Even without it, results are improving – slowly. And the path to beating its cost of capital may spring from an unlikely source: lending.
Microsoft carefully dismantles Ballmer legacy 17 Jul 2014 More than two-thirds of 18,000 announced job cuts at the $370 bln software company relate to just-acquired Nokia. Xbox also is gently being moved out of Microsoft’s central mission. Boss Satya Nadella is undoing his predecessor’s work in a tactful and value-creating way.
Murdoch may be heading for Pyrrhic Time Warner win 16 Jul 2014 The media mogul’s rebuffed $80 bln bid for his rival already looks a stretch. He’d need more than twice the $1 bln of expected synergies to cover that premium – and a ton of debt. History suggests the octogenarian won’t give up – and may destroy value by offering more.
Thornton unleashes Wall Street tactics on Barrick 16 Jul 2014 The gold group’s chairman has axed the CEO and handed the reins to two co-presidents. It’s similar to how Goldman Sachs operated when he was there. It also echoes Citi chair Mike O’Neill’s power play in ousting Vikram Pandit. Barrick needs a refresh, but the strategy has risks.
Slim isn’t the only picking to play Mexican oil 16 Jul 2014 Ending Pemex’s crude monopoly may herald a surge in drilling and output. That won’t much move the stock of incoming giants like Exxon. But it should boost Carlos Slim’s Grupo Carso, with its stable of drillers and services firms, and other local talent like Alfa and Grupo Mexico.
Dual-share inequity to figure in Time Warner fight 16 Jul 2014 If Rupert Murdoch wants to own the HBO-to-Looney Tunes conglomerate he needs to be willing to convert Fox into a one- share, one-vote company. The combo would be too big for a takeover anyway. The irony is that Fox’s super-votes are what give Murdoch the chutzpah to attempt a deal.
BofA stuck in a low-profitability trap 16 Jul 2014 Several of the bank’s businesses put in a good showing for the second quarter. Trouble is, even after aggressive cost-cutting, BofA is floundering. Strip out legal costs, tax breaks and other noise, and the firm run by Brian Moynihan can only manage a 6.4 pct return on equity.
Lottery firm buys pricey $5 bln ticket out of Italy 16 Jul 2014 GTECH is buying U.S. slot-machine maker IGT for $4.7 bln in cash and stock. That’s a bold price given IGT’s competitive challenges. The buyer is talking tough on synergies. Still, this cuts GTECH’s reliance on Italy - and could also bring down its tax bills.