Baxter puts conscious uncoupling on pharma radar 27 Mar 2014 The $40 bln healthcare giant is separating its biotech and medical products units. Baxter’s spinoff history suggests this latest move will create value for shareholders. This, and the success of Pfizer’s and Abbott’s recent splits, will encourage other pharma giants to follow.
Ken Lewis gets partial comeuppance for BofA mess 27 Mar 2014 The ex-CEO is paying $10 mln and is banned from top public company posts for three years to settle charges over BofA’s purchase of Merrill Lynch. It’s not much, especially with the bank adding another $6.3 bln in legal costs. But it’s a rare example of personal accountability.
Fed raises bar for Europe’s bank stress tests 27 Mar 2014 The Federal Reserve has found flaws in the U.S. capital plans of HSBC, RBS and Santander. While two American banks also failed the assessment, the focus on process shows the credibility of Europe’s stress tests will depend on more than capital quantum.
Citi’s latest fail should stress Mike O’Neill 27 Mar 2014 The Fed’s rejection of the mega-bank’s buyback and dividend plan is bad news for CEO Mike Corbat. The chairman, however, is more exposed. A similar flub two years ago helped convince him to oust then-boss Vikram Pandit. O’Neill may have to consider more radical action.
Candy Crush IPO a dose of reality for gaming saga 26 Mar 2014 King Digital, maker of the hit product, fell as much as 15 pct on its market debut. At least investors have a bit of healthy skepticism. But there’s no way to value a hit-driven business dependent on one game. Rivals may still manage to go public, but not at such lofty multiples.
Fed offers too little, too late on too big to fail 26 Mar 2014 The watchdog’s researchers reckon big banks benefit from a cheaper cost of funds than smaller rivals thanks to an implicit government backstop. That’s often true, especially during crises. But the Fed ignores more recent data. The behemoths’ advantage is actually shrinking.
Murdoch brings Shakespeare to a bureaucratic world 26 Mar 2014 In the latest chapter of a family saga worthy of the bard, the ageing media tycoon’s eldest son has returned to favour. Such hereditary shenanigans are unusual in meritocratic corporations, even when voting rights permit. No wonder, since family fights are usually unprofitable.
Time for Sheryl Sandberg to lean out of Facebook 26 Mar 2014 She was the adult supervisor as Mark Zuckerberg’s dorm room creation became a $165 bln enterprise. The founder is now doing his own thing, as his latest $2 bln gadget acquisition shows. For Sandberg, he’s a liability. She could be U.S. president, but first needs to run something.
U.S. bond yields may ape trailblazing UK shifts 26 Mar 2014 Fixed-income investors are wondering if the Fed will raise rates sooner than expected. They won’t have to think too hard about how to react since a similar situation has already cropped up in Britain. Short-dated bond yields are likely to rise much faster than long-dated ones.
Zuckerberg grabs at alternate financial reality 26 Mar 2014 The Facebook founder is buying virtual-reality upstart Oculus for a whopping $2 bln. It’s arguably a riskier punt than spending $19 bln on WhatsApp. Both deals suggest a quest for the next big thing – and a willingness to use the social network’s stock to buy rather than build.
Sumitomo’s U.S. expansion needs cautious approach 26 Mar 2014 The Japanese bank is eyeing Royal Bank of Scotland’s American retail arm. A full takeover would give Sumitomo higher margins in a healthier economy and the UK bank a speedier exit from a non-core asset. But Citizens doesn’t yet look a business worth paying through the nose for.
Big tech valuations come in small packages 25 Mar 2014 Dropbox is now worth $10 bln and Airbnb soon could be thanks to recent funding rounds. Both cases would involve just a wee slug of equity. A flurry of such later-stage, private deals seems to be less about raising cash and more about egos, attention and anchoring future IPOs.
U.S. financial reform is still on to-do list 25 Mar 2014 The Dodd-Frank law brought broad new rules for Wall Street. Lawmakers are now focused on mortgage finance. That’s a valid priority, but if it weren’t for Washington’s logjam they could tackle far more, including money markets, mechanisms for bank failure and virtual currencies.
Dimon deputy epitomizes succession of all sorts 25 Mar 2014 Mike Cavanagh gave up a shot at following his mentor atop JPMorgan for one helping run Carlyle. Being CEO of a bank holds less appeal thanks to shrinking returns and growing regulation. The move shakes up leadership plans for two firms and underscores a bigger shift in finance.
Activists crash dealmaker party 25 Mar 2014 Shareholder lawsuits, cross-border mergers and defender-in-chief Marty Lipton will play supporting roles at the annual New Orleans M&A confab. Aggressive investors shaking dozy boards are the headliners. Their increasing presence at the gathering reinforces a growing power.
Box ties a neat bow on Silicon Valley IPOs 25 Mar 2014 The cloud storage company plans to go public with a net loss greater than its revenue. Box is growing fast, doesn’t expect to be profitable any time soon, will have two classes of shares, a CEO who is under 30 and some mysterious metrics. It’s the internet era in one package.
GrubHub IPO includes needless flavor enhancers 24 Mar 2014 Investors are surely working up an appetite for the $1.7 bln U.S. online takeout service, as well as for its European peer Just Eat. Mobile device use should feed healthy expansion. But GrubHub’s prospectus flatters its growth. There’s the latest in not-so-tasty new metrics, too.
Exxon finally warms to climate change disclosure 24 Mar 2014 Investors fear that a crackdown on carbon emissions could make much of the energy giant’s crude reserves all but worthless. The company has agreed to reveal its assessment of that risk. The move could put Exxon ahead of rivals in weathering - and accounting for - global warming.
Piketty cult is a danger for his cause 24 Mar 2014 A gloomy new book on capitalism ends with a call for higher taxes on the rich. Sympathy for Thomas Piketty’s reasonable conclusion is feeding outsized praise for a half-baked economic analysis. Ultimately his confused arguments may weaken the case for pay restraint.
Elusive U.S. manufacturing boom is just delayed 24 Mar 2014 Job growth in the sector of just 5 pct since 2010 hardly counts as a renaissance, even though U.S. firms pay only half as much for energy as European and Asian rivals. But the advantage looks set to continue for years. That leaves time for industrial activity and jobs to return.