$15 bln tech M&A spree poor fix to limp sales 2 Mar 2015 Chipmaker NXP and networking gear firm HP need strong demand to compensate for falling prices. Trouble is, that has not happened. Buying Freescale and Aruba will help cut costs, build scale and fill in niches. But neither deal turns tech hardware into a growth market.
Tech drive strips old-school carmakers of clout 2 Mar 2015 Apple is the latest to take an interest. From Tesla to Google, the shift to connected, self-driving vehicles may take a while, but it could shake up everything from systems to materials to car usage. The winners may be able to rev up returns far higher than current performance.
Buffett highlights the paradoxes of being Warren 2 Mar 2015 The sage of Omaha packed yet more folksy wisdom into his shareholder letter marking 50 years atop Berkshire Hathaway. He also revealed some ironies ranging from how his firm works, to corporate governance, to Wall Street’s usefulness. Success, it seems, requires contradictions.
U.S. student loans could need $500 bln bailout 27 Feb 2015 Borrowing for education has soared over the past decade, ballooning to $1.2 trln and growing far faster than GDP. With serious delinquencies at 11 pct and Washington on the hook, there’s a mess in the making. A Breakingviews calculator shows how big Uncle Sam’s exposure could get.
U.S. airlines throwing stones from glass hangars 27 Feb 2015 Delta, United and American want trade deals changed, arguing Gulf rivals are unfairly subsidized. That’s rich, given the bailouts, antitrust exemptions and other goodies these three enjoy. Blowback from domestic peers may persuade them that whining to Uncle Sam won’t fly.
Verizon taps out unwise riposte to new web rules 26 Feb 2015 Regulators are giving consumers a boost by preventing broadband providers from offering favorable treatment to certain clients. But the telecoms giant expressed its discontent in Morse code and then in old typeset. Disagreeing is fine. Taunting your overseer, though, is a risky move.
Oil finally percolating toward a level price 26 Feb 2015 U.S. light crude has rallied 12 pct from last month’s six-year low but is still shy of where shale drillers can profit. Higher demand and less capital spending may push prices up while steady output from Saudi Arabia and others limits their rise. About $60 a barrel looks likely.
JPMorgan pruning could help fees sprout anew 26 Feb 2015 The U.S. mega-bank may trim some Wall Street operations if returns don’t improve. It’s bad news for smaller rivals if one of the biggest players in rates and derivatives can’t make money in some areas. But if clients end up paying more, bank investors will eventually benefit.
Morgan Stanley makes $2.7 bln hit an afterthought 26 Feb 2015 Like Citi, the bank sprung a legal settlement on investors. Unlike its rival, Morgan Stanley has shunted the cost into the previous year, making 2014 profit barely more than half what was reported. That’s handy, if cynical, for a Wall Street firm keen to trumpet its turnaround.
Rob Cox: Welcome to the new, global Tangentopoli 26 Feb 2015 Corruption is causing trouble for elites from Sao Paulo to Virginia and Santiago to London. Inequality can be a tolerable byproduct of free-market capitalism, but not when the winners are profiting from a rigged system. As a new book argues, such gains encourage radicalism.
Iberdrola takes baby steps to grow U.S. business 26 Feb 2015 The Spanish utility is paying $3 billion mostly in shares to merge its U.S. assets with much smaller listed UIL. The U.S. has greater growth potential than Spain, and the price isn’t cheap. But the small cash outlay makes this a relatively low-risk, if not transformational, deal.
Fed critics confuse independence with lack of bias 25 Feb 2015 U.S. lawmakers accused central bank Chair Janet Yellen of playing political favorites. Revealing more about her meetings wouldn’t hurt. But Fed officials favor different economic models that may reflect party divisions. That doesn’t mean they aren’t making their own decisions.
Computer Sciences LBO talk rings unhappy bells 25 Feb 2015 Activist investor Jana and the $10 bln IT services firm’s bosses have incentives to sell. But past attempts to find a buyer for the company have foundered. Declining sales and vulnerable cash flow make it a tricky buyout candidate. Splitting it up may be a better first step.
Solar strikes it rich in oil’s financial wells 25 Feb 2015 A SunPower and First Solar JV will pool assets in a company that could pay fat dividends. The renewable energy page out of fossil fuel’s playbook generated $1.5 bln of extra market value. The structure presents some conflicts and the pressure will be on to supply new projects.
Lowball SFX bid stops music at Wall Street rave 25 Feb 2015 Robert Sillerman, the U.S. entrepreneur trying to roll up EDM festivals as he did concerts, is offering 37 cents on the IPO dollar for the remainder of the firm he took public less than two years ago. It’s shameful treatment of public investors. They were, however, amply warned.
Social trends may point to higher yields, someday 25 Feb 2015 In 2005, a Barclays strategist suggested a declining population of savers could push bond and stock prices down. A decade later, a different strategist at the same bank says the same thing. It may work out in time, but demographics have more influence on GDP than asset values.
JPMorgan optimism reinforces industry mediocrity 24 Feb 2015 Jamie Dimon and crew reckon growth, cost cuts and new fees can boost earnings 43 pct and help silence talk of a breakup. Trouble is, the bank’s 2017 target puts tangible ROE at just 15 pct. That’s not bad but underscores what an unimpressive investment big banking has become.
Vague Yellen more likely to surprise than soothe 24 Feb 2015 The Fed chair deftly parried conflicting calls for more patience and higher interest rates in congressional testimony on Tuesday. What she didn’t do is offer clarity on the timing of a rate hike. The strategy may calm markets now but ensures everyone will be caught off guard.
Cheap oil highlights multifaceted resource curse 24 Feb 2015 Commodities-dependent nations got more bad news, as BHP warned on iron ore prices. To survive, many will need to turn their economies upside down. Resources prevent long-term strategies, dull the good and bad governance gap and ultimately cloud voters’ views of who’s responsible.
Wall Street’s broker fight is another losing cause 23 Feb 2015 The White House is pushing new rules for agents and retirement advisers that the industry says will hurt investors and curb fees. Added duties are sensible, however. The clarity is probably worth the price and fledgling online startups should pick up some of the customer slack.