BofA’s FIRREA-swallowing act causes indigestion 21 Aug 2014 Regulators are using the obscure law with longer deadlines to extract hefty penalties, including a record $16.7 bln from BofA. Even Countrywide’s Angelo Mozilo seems in their grasp. Aggrieved investors may be appreciative but it’s a dubious way to make up for a missed crackdown.
Hertz gears up for another financial spin 21 Aug 2014 Carl Icahn is the latest to buy into the struggling $14 bln car rental firm. Over nearly a century, automakers GM and Ford, an airline, a 1960s conglomerate, private equity and the public have owned Hertz. It’s a perennial investor plaything. Maybe Uber could even be next.
Infineon’s $3 bln buy relies on profit margin hike 21 Aug 2014 The German semiconductor company is paying a rich 48 pct premium to snap up International Rectifier. The fit is complementary: its U.S. peer’s strength is chips that consume less power than the typical Infineon product. But top-notch execution is required.
Berkshire owner’s departure dims Buffett mystique 20 Aug 2014 Value investor David Winters sold his shares in the Oracle of Omaha’s conglomerate over a clash about Coca-Cola’s pay practices. The rare backlash follows other governance and market performance letdowns. Buffett’s recent choices are undermining his legacy and maybe Berkshire’s.
Ballmer’s exit value is now Nadella’s to preserve 20 Aug 2014 Microsoft’s market capitalization grew by over $100 bln from the day about a year ago the longtime CEO said he would resign to Tuesday, when he left the board. With his predecessor fading from the picture, maintaining the momentum is now firmly in new boss Satya Nadella’s hands.
Latest blunder hits StanChart where it most hurts 20 Aug 2014 New York regulators have fined the emerging markets bank another $300 mln for compliance lapses. StanChart’s biggest problem is still its misfiring strategy. But such avoidable missteps reinforce a disturbing impression that senior managers are too detached from daily operations.
U.S. farm credit looks safer than houses 19 Aug 2014 Washington’s $200 billion-plus subsidized agricultural lending complex includes Farmer Mac, a rural copy of ill-fated Fannie Mae and Freddie Mac. Despite a hot farmland market, though, the system looks ruggedly capitalized enough to avoid the bailout fate of the home-loan behemoths.
Brasilia’s amateur electricians spark power crisis 19 Aug 2014 President Dilma Rousseff chose the wrong tool to reduce the country’s sky-high electricity bills. Back in 2012, she forced utilities to cut prices. Helped by a drought, that has brought financial losses and bailouts. Now Brazil faces rationing, a bump in prices, or both.
Beware of surges in infrastructure investment 19 Aug 2014 When growth is slow or when resource wealth is pouring in, developing country governments often ramp up investment programs. An IMF paper shows these surges don’t boost GDP, largely because so much money is wasted. State investments should progress with the rest of the economy.
Buyout fund investors may need parcel protection 18 Aug 2014 As companies flex their stock and synergy muscles in this year’s M&A revival, private equity firms have resorted to buying mainly from each other. So-called pass-the-parcel deals tend to generate weaker returns. Limited partners could justifiably seek curbs on their use.
Dollar store bid battle leaves value on the table 18 Aug 2014 Dollar General’s $9.7 bln offer for rival U.S. discount retailer Family Dollar tops an earlier bid from Dollar Tree. The new suitor is also offering all cash instead of part shares and may be a better fit. But there’s room for either to lob in a few more singles to clinch a deal.
Coke investment reveals half-empty idea bottle 15 Aug 2014 The beverage behemoth is paying $2.2 bln for 17 pct of the trendy energy-drink maker Monster. It goes to show that even a $176 bln global powerhouse with significant distribution and marketing advantages can struggle to stay ahead. At least Coke got the deal formula right.
Hollywood’s summer blockbuster: cinema survival 15 Aug 2014 The latest box-office slump is a movie seen many times before by U.S. exhibitors. Premier League soccer and 3D films may help underpin valuations for AMC, Regal and Cinemark, while China expansion should propel IMAX. The threat of new technology, though, is a real cliffhanger.
U.S. commercial and legal reach pegged to dollar 14 Aug 2014 Whether fining foreign banks like BNP or barring U.S. firms from business with governments it wants to punish, Uncle Sam has huge global clout. Having big companies and banks is part of it, but issuing the world’s reserve currency – and clearing trades at home - may do more.
Venezuela digs way to distressed seller status 14 Aug 2014 The country wants to offload Citgo, its U.S. refinery and pipelines unit. It may be worth up to $15 bln, money that’s sorely needed thanks to President Nicolas Maduro’s barmy economic policies. And the drop in value of heavy-oil assets like Citgo owns makes it a bad time to sell.
Detroit faces bumpy road out of bankruptcy 14 Aug 2014 The Motor City has deals with most of its creditors, pending court approval later this month. Plans could still go sideways if holdout bond insurers persuade the judge they’re getting shafted. That’s a stretch, but the legal wrangling alone could slow the city’s momentum.
IPO exuberance ensnares Deutsche, Wells Fargo 13 Aug 2014 The two banks nixed a biotech deal six days after it started trading. Their reasoning looks defensible – an insider reneged on buying a big chunk of shares. But the Wall Street firms’ willingness to sell the stock in the first place smacks of a return of top-of-the-market laxity.
A French revolution could disrupt U.S. mobile 13 Aug 2014 Xavier Niel’s Iliad is the Ryanair or Aldi of telecoms – lean and clever. Winning control of T-Mobile US could allow the French billionaire to repeat some of his tricks Stateside. That might guillotine market share and margins at AT&T and Verizon.
Alibaba payments cleanup makes for neater IPO 13 Aug 2014 The e-commerce group has rejigged relations with its Alipay affiliate weeks before its planned listing. The move has little impact on earnings, but reduces the risk of regulatory interference. And if the business turns into a behemoth, Alibaba investors get part of that value.
California’s water fix a drop in proverbial bucket 12 Aug 2014 The drought-hit state is close to recommending a $7 bln bond to help upgrade its aging pipes and reservoirs. But famously reluctant voters still have to approve the measure. And the sum may not cover even 15 pct of what’s needed to bolster California’s water infrastructure by 2022.