Phibro deal resurrects Wall Street’s worst ways 27 Jan 2016 Morgan Stanley’s ex-commodities boss is acquiring assets of the oil-trading shop that once bought Salomon Bros. Breathing life into this old brand is misplaced sentimentality. Phibro’s history is stuffed with coups, excess pay, trading hubris and the buy-high, sell-low mentality.
Apple may be in for model-cycle purgatory 26 Jan 2016 The $550 bln tech giant’s top line nearly flatlined as demand for its smartphones stalled in the last quarter of 2015. Sales are set to slide in the current period. A $216 bln cash hoard and a low valuation should offer solace, but investors could fixate on the next new iPhones.
Dell-EMC deal stuck between two zero options 26 Jan 2016 The computer-storage maker’s market cap has fallen below $50 bln, against an original headline buyout value of $67 bln. And equity prices suggest either the deal is in jeopardy or the VMware tracking stock EMC holders will receive is worthless. Merger overreach may be to blame.
Establishment oil outlook is ripe for disruption 26 Jan 2016 Exxon and OPEC reckon oil and gas will provide the lion’s share of world energy in 2040, with solar and wind still bit-players despite the recent climate pact. The view reflects past snail’s-paced shifts, but it’s vulnerable to driverless cars, better batteries and other tech.
AIG makes late push toward mediocrity 26 Jan 2016 The mega-insurer unveiled plans to sell businesses, slash costs and return $25 bln to shareholders. That’d be a lot for most companies under siege from an activist like Carl Icahn. It’ll only get AIG to a subpar return on equity of 9 pct. This breakup story has further to go.
Banks give U.S. regulators a deal to cherish 26 Jan 2016 Buying cross-state rival FirstMerit for $3.4 bln should make Huntington Bancshares big enough to compete without being too big to fail. With some $100 bln in assets, it’ll be a stronger rival in important Midwestern cities. Even if shareholders have worries, watchdogs shouldn’t.
Sprint staggers into a merger showdown 26 Jan 2016 The smallest of four big U.S. wireless carriers surprised investors with a cheerier outlook. Even so, it’s weighed down by debt and engaged in a price war set off by U.S. authorities blocking consolidation. Eventually, Masayoshi Son’s Sprint will need more cash – or a deal.
Viacom CEO’s pay thumbs nose at shareholder value 25 Jan 2016 Philippe Dauman took a 30 pct bonus cut last year as the media company struggled. But the stock he got to renew his contract more than made up for it. With revenue, earnings and shares all falling, his comp is an apt example of the tin-eared nature of Sumner Redstone’s empire.
Hollywood can give virtual reality its star power 25 Jan 2016 Facebook’s Oculus Rift just went on sale for $599. As with most new technology, it’ll mainly appeal to video gamers and other nerdy enthusiasts. Rupert Murdoch’s Fox buying a stake in a Silicon Valley augmented-reality firm offers a glimpse of what it’ll take to woo the masses.
Johnson-Tyco inversion is insured against politics 25 Jan 2016 U.S. building-controls maker Johnson Controls’ $16 bln purchase of Ireland-domiciled Tyco risks becoming a target for critics of tax-reducing deals. But with an expected $500 mln of yearly savings and a low 11 pct premium for Tyco’s owners, tax savings are gravy, not meat.
Twitter’s permanent revolution invites interlopers 25 Jan 2016 Four top executives have stepped down, according to CEO Jack Dorsey, via a tweet. Management turmoil hasn’t done any favors for the $12 bln media business. With the stock below its IPO price and Dorsey also running Square, a takeover could spare Twitter a fate like Yahoo’s.
Google UK tax truce more significant than it looks 25 Jan 2016 The search engine will pay 200 mln pounds in UK taxes for a decade in which it made 24 bln pounds in revenue. Google could have paid 10 times the tax based on profit margins elsewhere. But this is a sign that, however slowly, international standards are changing cosy habits.
Ads put Alphabet within spitting range of Apple 22 Jan 2016 The former Google’s market cap has topped $500 bln and is inching toward the iPhone maker’s. Investors value the search firm’s earnings from fast-growing digital advertising twice as highly as Apple’s from a saturating smartphone market. They may be overlooking serious risks.
Finance wrestles with post-millennial tension 22 Jan 2016 Youngsters dominate the workforce, and the conversation at Davos. Fearful of losing talent, investment banks are giving millennials fewer hours, faster promotion and more leisure. What looks like a new trend is just a reversion to the mean – with some confused thinking thrown in.
Disney aims to repeat luck of Star Wars delay 22 Jan 2016 The seventh movie in the franchise, released last month, was originally planned for mid-2015. With “The Force Awakens” shattering box-office records, it offers a new Hollywood roadmap. Having stumbled upon a magic formula, the Mouse House is delaying episode eight, too.
California gas leak a BP moment for U.S. polluters 22 Jan 2016 A Sempra Energy facility has spewed almost 90,000 tons of methane since October. The environmental harm may rival that of the UK oil giant’s 2010 Macondo well spill. American enforcers fined BP some $19 bln for that fiasco. Homegrown violators deserve equally tough treatment.
Philips’ failed deal puts Chinese bids in the dark 22 Jan 2016 The Dutch firm’s sale of 80 pct of its specialty lighting arm to a Chinese fund has failed on U.S. security fears. Philips’ Lumileds unit has tech smarts and stateside operations, but this looks like regulatory overreach. Pending Chinese bids for hardware now seem less certain.
Jamie Dimon’s big raise amazingly hits right note 22 Jan 2016 Lifting the JPMorgan CEO’s compensation 35 pct to $27 mln may seem tin-eared with shares down some 12 pct last year and staff pay flat. But most of the award is tied to future results, a concession to investors that brings the bank in line with peers. Call it a raise with teeth.
Time Warner breakup has gone far enough 21 Jan 2016 Boss Jeff Bewkes has dismantled the media conglomerate, spinning off AOL, Time Warner Cable and Time Inc. Shrinking further by, say, separating HBO lacks a compelling financial rationale. The real question is when Time Warner will again attract a suitor.
Chancellor: Best cure for low oil is low prices 21 Jan 2016 Having invested heavily, both mining and energy firms are struggling with oversupply and weak prices. New mining production from BHP and others will continue to weigh on commodities for years. But oil investment cuts set the stage for the next bull market in the black stuff.