United States of America

Microsoft could use some self-inflicted activism

19 July 2018

The software giant now has more than $50 bln in net cash, thanks in part to successfully growing its cloud platform. Tax changes will boost its hoard even faster. With debt easily manageable, the company ought to boost dividends and buybacks, before pushy investors force it to.

Automakers’ U.S. tariff fight heads down dead end

19 July 2018

The industry argues import duties would force Americans to pay an extra $83 bln a year for new cars. There’s a chance next week’s Trump-Juncker summit will yield a deal. But the U.S. president seems determined to punish countries for past trade wrongs, real or perceived.

Viewsroom: Europe puts Google in a bind

19 July 2018

The search firm can easily cover the EU’s $5 bln fine for using its Android phone system to stymie rivals. But the order to stop forcing handset makers to pre-install its software could clip innovation. Plus: Goldman Sachs and Tesla put lackluster corporate governance on show.

High hopes accompany Wall Street’s first weed IPO

19 July 2018

Canadian cannabis producer Tilray's stock opened a third above its already raised IPO price, nudging its value above $2.1 bln. That's hefty, but still below bigger Canadian peers Aurora and Canopy Growth. Investors seem undeterred by industry risk - and a dual-class share structure.

Comcast’s second loss to Disney is a victory

19 July 2018

Boss Brian Roberts decided not to top rival Bob Iger’s $71 bln bid for Fox assets, instead focusing on buying Sky. In 2004, Comcast also backed down after trying to buy the Mouse House. Given the eye-watering price Disney is paying, Roberts and his shareholders are the winners.

Fedspeak puts America’s best bank in a quandary

18 July 2018

Supervision boss Randy Quarles reckons the biggest straight-up U.S. lenders need fewer regulatory constraints than the likes of JPMorgan. U.S. Bancorp, which again earned industry-leading returns last quarter, would benefit, but could also face M&A pressure it would rather avoid.

Tech’s four superpowers come with kryptonite

18 July 2018

Silicon Valley is onto something big. The cloud, mobile, connected devices and artificial intelligence are finally providing real benefits, from disease prevention to classroom safety. Negative consequences, though, are dangers techies mostly prefer someone else to tackle.

Buffett buyback shift signals lack of good ideas

18 July 2018

Berkshire Hathaway is making it easier for the Sage of Omaha to repurchase its stock. That sent shares up 4 pct. The change implies that Buffett can find neither acquisition targets big enough to move the earnings needle, nor other smart ways to deploy its $109 bln cash pile.

Blackstone gets “insurance” on $20 bln F&R deal

18 July 2018

Its buyout of Thomson Reuters’ financial-data arm comes with features that enhance the seller’s upside if things go very well – but leaves Steve Schwarzman’s investment firm in better shape if things wobble. That ought to help hold the Canadian group’s feet to the fire.

IWG suitors need sparkle to make takeover work

18 July 2018

Four bidders circling the shared office provider are hoping to unlock the toppy valuation of rival WeWork. A 2.9 bln pound offer would allow founder and part-owner Mark Dixon to retire in style. But to get a decent return, buyers need leverage and a plan to ramp up earnings.

EU’s $5 bln fine is the least of Google’s worries

18 July 2018

The Alphabet unit can absorb another record European antitrust penalty. A companion order requiring it to stop forcing handset makers to pre-install its Google search app and Chrome browser may cause more damage – and curb the firm from expanding in areas like self-driving cars.

Gorman shows new Goldman CEO clean pair of heels

18 July 2018

Morgan Stanley’s boss hit the top of his profit target last quarter and handily beat his rival’s returns, after stripping out surprisingly lower pay. It’s more confirmation Gorman has built a strong business, and sets a tough marker for David Solomon’s promised revamp at Goldman.

Investors bet fake-news swamp is left undrained

17 July 2018

U.S. lawmakers grilled Facebook, Alphabet’s YouTube and Twitter about how they filter an ocean of content. Both questions and answers made any plausible bias-free approach seem remote. Yet the companies’ rising stocks suggest confidence that no serious regulation will follow.

Powell could help stiffen Congress’ spine on trade

17 July 2018

The Fed chief told lawmakers U.S. tariffs could threaten wage growth, but said it was unpredictable. Trade policy isn’t the Fed’s remit. Politicians are, though, worried at the early effects – yet they don’t want to anger Trump. A stronger steer from Powell might tip the balance.

Goldman gets a B-minus on governance

17 July 2018

Strong quarterly earnings may be a reassuring backdrop for boss Lloyd Blankfein’s retirement. But making David Solomon chairman and CEO muddies the Wall Street firm's succession. Splitting the roles would be better, and there’s already a good candidate on the board.

Netflix growth setback gives rivals an opening

16 July 2018

The streaming-video service attracted fewer new subscribers than forecast in the latest quarter, knocking $20 bln off its value. That will comfort Disney and Comcast as they wage a costly battle for Fox and Sky. Yet with 130 mln customers, Netflix remains far ahead in the race.

Elon Musk outburst puts Tesla board on the spot

16 July 2018

Punishing a CEO who tweets, without evidence, that someone is a pedophile ought to be a no-brainer. But Musk’s fortunes and the electric-car maker’s are symbiotic, and his allies pack the board. Investors should worry for their own sakes if directors fail to act this time.

Goldman’s new DJ samples crosstown rival’s beat

16 July 2018

Anointing part-time tune-spinner and investment banker David Solomon as the Wall Street firm's next CEO would further de-emphasize Goldman’s volatile trading business. Morgan Stanley did something similar back in 2010 – though there, traders are again in the ascendant.

Supermarket buying pacts dodge primary problem

16 July 2018

Alliances to pool purchases, like one signed by Carrefour and Tesco, have in the past boosted grocers’ operating margin by up to 1.5 percentage points. Wringing savings without all the hassle of a merger is great. It does less to stop Aldi and Lidl grabbing market share.

Citigroup looks stuck with a crisis discount

16 July 2018

Though the $290 bln BofA cranked out better second-quarter results than Michael Corbat's $170 bln bank, its annual returns are forecast to be in the same ballpark. Even so, Brian Moynihan's lender sports a big valuation premium. That suggests investors haven’t forgiven Citi yet.