Macy’s will struggle to resist real estate sale 15 Jul 2015 Activist fund Starboard has bought into the $23 bln U.S. department store chain, earmarking the company’s property holdings as a source of value. Spinning off buildings is a hot trend, and the numbers add up for Macy’s. The long-term risks, though, shouldn’t be discounted.
Santander puts JPMorgan stamp on U.S. business 15 Jul 2015 Blythe Masters’ appointment as chair of the Spanish bank’s auto lender leaves the Wall Street bank’s alumni in four of the top roles in its U.S. units. Masters isn’t an obvious choice. But the hire shows group CEO Ana Botin, also ex-JPMorgan, is serious about fixing the business.
U.S. graft case replete with muni market lessons 15 Jul 2015 The ex-mayor of Harrisburg, in office for 28 years, faces 499 criminal counts for theft, bribery and other sins, some relating to ill-judged borrowing that led to the city going bust. Whatever the outcome, officials and investors share blame for letting an imperial CEO run amok.
BofA earnings best in years but tougher task ahead 15 Jul 2015 The bank run by Brian Moynihan cranked out a second-quarter profit of $5 bln as costs hit their lowest level since 2008. Return on equity remains subpar, though. Without some one-off extras, BofA’s core earnings would need to rise almost 40 pct to beat its cost of capital.
Fund managers beat banks in anti-regulation tussle 15 Jul 2015 Regulators look unlikely to slap a too-big-to-fail tag on the world’s biggest asset gatherers. That’s a lobbying victory for the likes of BlackRock, but it’s also the right call. Systemic risk stems from leverage and maturity transformation. Fixating on size is a distraction.
Biotech feeds on itself with $7 bln Celgene deal 15 Jul 2015 The cancer drug giant is scooping up Receptos for 16 times its 2013 float price. The target has promise but no approved drug, yet Celgene’s market value rose by nearly $5.5 bln. With the bio bull market rewarding both seller and buyer, dealmaking is getting pumped up on steroids.
Wells Fargo shows lower earnings can be good news 14 Jul 2015 The bank’s $5.4 bln second-quarter profit needed some help to hit estimates. And returns, though better than most rivals’, are falling. That might sound like trouble brewing. But it’s more a sign that boss John Stumpf is eschewing riskier business for stable earnings.
Pluto and pentaquarks boost non-profit science 14 Jul 2015 NASA’s distant mission has gone viral, while European researchers have accidentally proven a 50-year-old theory about matter. Open-ended research at, say, Google is valuable, but government-funded basic science offers unmatched intellectual gains and unexpected practical benefits.
JPMorgan is running fast just to stand still 14 Jul 2015 Jamie Dimon’s bank grew lending, cut costs and rejigged other businesses, but relied on one-off gains to beat estimates with $6.3 bln in profit. After all that, the mega-bank’s return on equity is stuck at 11 pct. Only rising interest rates might fuel a stronger performance.
Micron would be a less-than-fab deal for China 14 Jul 2015 A state-backed group is reportedly eyeing a record $23 bln bid for the U.S. memory-chip maker. Beijing is already building a standalone semiconductor industry via smaller takeovers. But completing this deal, and getting the most out of the acquired business, will be much harder.
Energy deal treadmill has bounce left in it yet 13 Jul 2015 Marathon Petroleum’s pipeline unit will pay $15.6 bln for gas processor MarkWest. It’s fresh evidence that energy-sector partnerships crave big deals that lower capital costs and boost payouts - despite two prominent rivals’ attempts to pull the plug on the structure.
U.S. bank bosses get greedy in latest merger 13 Jul 2015 The Fed has approved BB&T’s purchase of Susquehanna, one of the industry’s biggest transactions in years. Other lenders may be relieved to see the deal pipeline flow again. The buyer’s top brass, meanwhile, will share an undeserved $2.5 mln bonus, a blot on otherwise good news.
Houlihan IPO will hoist new boutique value flag 13 Jul 2015 The U.S. advisory firm had lowish profit margins on $681 mln of revenue last year, and new owners won’t have much say. But Houlihan Lokey may weather any downturn better than other independents. That factor will make valuing Lazard, Evercore, Moelis and Greenhill even tougher.
Comcast’s streaming dribble will become flood 13 Jul 2015 The largest U.S. cable TV provider is dipping its toe in the water, offering a very limited set of channels via broadband. It’s a belated nod toward people who are pulling the plug on pricey bundled cable services. Comcast and its rivals will end up having to go much further.
Thruppence: Sympathy for the devil in boardrooms 10 Jul 2015 Appointing a “contrarian director” to challenge management recommendations was the winning suggestion from an MBA student in a competition sponsored by Cambridge and McKinsey. Even some Breakingviews columnists who reject the proposal would like to see more devil’s advocacy.
White House hopeful is a punchline for bank reform 9 Jul 2015 Who mistakenly cited a joke website in his case against Wall Street? Martin O’Malley, the champion of breakups, trading taxes and other questionable ideas. His pitch may push other candidates to adopt more left-leaning views but risks being laughed off as mere rabble rousing.
Prison break frees Columbia to make a difference 9 Jul 2015 Divesting from private jailers may actually boost the Ivy League school’s influence over a bloated U.S. penal system. Investments that pay off if inmate populations drop rather than rise can prompt fundamental change. The profit may be less, but the returns to society priceless.
Rob Cox: The (bank) resolution will be televised 9 Jul 2015 Global regulators have made great progress preparing for the technical aspects of a collapse, and resurrection, of a major financial institution. What they need to spend more time on is ensuring they can effectively communicate the process to a world consumed by financial panic.
Coty’s $12.5 bln P&G deal slaps on too much makeup 9 Jul 2015 The fragrance giant is touting $550 mln of cost cuts from buying its larger rival’s beauty business. But that overstates the financial benefits of a tie-up that will take time and money to consummate. Coty’s once over-enthusiastic investors are at least seeing through the gloss.
Hollywood timidly welcomes new digital overlords 9 Jul 2015 Viacom’s Paramount Pictures struck a deal with two cinema chains to make films available in homes weeks, instead of months, after their theatrical release. It’s another baby step to cater to fast-evolving habits of consumers. Soon enough, though, more radical change should come.