Apple CFO handover shows off big company mettle 4 Mar 2014 Peter Oppenheimer’s exit and move to Goldman’s board look well orchestrated, especially for tech-land. Investors want that from a $470 bln company with $159 bln in cash. The trick is to not let an establishment mindset take hold. Apple’s success is based on disruptive products.
Wall Street sings from same dismal FICC sheet 4 Mar 2014 Jefferies has joined Citigroup and JPMorgan saying trading revenue is down by at least 15 pct this year. Some pain was expected. What’s odd is that banks seem to be suffering equally. It’s a potentially worrying sign if even having a distinctive business model doesn’t help.
Tobacco deal may work if survives regulatory fire 4 Mar 2014 Reynolds American might be mulling a bid for rival Lorillard. Similar deals suggest the Camel cigarette maker could sensibly stretch to offer a 30 pct premium. The strategic benefits are also fairly clear. But antitrust and other watchdogs may send any transaction up in smoke.
Soaring corporate legal eagles on precarious perch 3 Mar 2014 Credit Suisse and others are eschewing costly outside counsel in matters ranging from big cases to CEO advice at U.S. Senate hearings. But as the ex-law chiefs at Pfizer and Wellpoint can attest, that puts pressure on in-house attorneys. They’re easy targets if things go awry.
Inverses Buffett and Icahn correlate many ways too 3 Mar 2014 The billionaires are touting their respective returns and investment approaches in shareholder letters. While time horizons and styles distinguish them, both outperform the market by playing hardball and trading on personal brands. Neither can be easily replicated either.
U.S. is minimum-wage laggard given its prosperity 3 Mar 2014 With Washington considering a higher pay floor and Peru’s prime minister losing his job over the issue, a Breakingviews analysis shows global minimum wages as a percentage of per-capita GDP vary widely. By this measure, the U.S. and, say, Mexico have plenty of space to lift pay.
West can hurt Russia – if there’s a will 3 Mar 2014 The U.S. and Europe say Russia will pay a cost for its actions in Crimea. Markets contributed by sending Moscow exchanges down 10 pct. But Putin won’t be impressed until Europe reviews the two pillars of its relationship with Russia – finance and gas. That won’t happen overnight.
Citi’s Mexico fraud besmirches industry further 28 Feb 2014 The mega-bank has been cheated out of $400 mln by an oil services firm in one of the most basic businesses in banking – accounts receivable. Citi’s Banamex didn’t even spot it – Mexico’s government did. Missing such simple fraud is something that should worry Citi’s rivals, too.
Big Oil could use some venture capital mojo 28 Feb 2014 An unwillingness to tackle small wells meant oil majors missed out on the lucrative U.S. shale oil boom. Exxon and its ilk were too focused on mega-projects. Seeding a new generation of nimbler upstarts, a strategy that worked for Big Pharma, might renew verve and boost output.
Review: GDP and its discontents 28 Feb 2014 Diane Coyle’s new book discusses the many weaknesses of GDP, the standard measure of economic success. Why do policymakers still rely on it? Her answer is that the alternatives are no better. That’s fair, but her analysis leads to a more aggressive, and compelling, conclusion.
Blackstone bets Versace can go up a few sizes 28 Feb 2014 The U.S. group is buying 20 pct of the Italian fashion house. The 1 bln euro, all-equity minority deal shows that buyout firms are lacking classic takeover opportunities. This is also a bet that Versace’s lightweight business can one day match the power of its extra-large brand.
Tesla customizes hot new convertible for hedgies 27 Feb 2014 A $1.6 bln bond that becomes equity is a cheap way for Elon Musk’s electric carmaker to raise cash for its new Gigafactory. Hedge funds love such securities, which provide unique trading opportunities on volatile stocks. And lately they’ve been almost as hard to buy as a Tesla.
Dan Loeb bids against himself at Sotheby’s 27 Feb 2014 The hedge fund activist surprised the auctioneer by nominating three directors, after the firm offered him one uncontested board seat and listened to, and even acted on, some of his gripes. Loeb must have reasons, but it may discourage other targets from engaging with activists.
TXU’s carcass scavenged for tax meat 27 Feb 2014 The Texas utility renamed Energy Future is nearly bust six-plus years after the $45 bln takeover led by KKR and TPG. A flock of buyout firms and hedge funds, including Apollo and Avenue, are clawing at each other for the scraps. This odd beast has juicy bits buried in its books.
PayPal has outgrown eBay’s warm embrace 27 Feb 2014 The online merchant’s ownership provided rich soil for the payments system to thrive. But PayPal is now mature enough to grow faster on its own. Separating the two businesses could send eBay’s stock up 15 percent or more.
Credit Suisse boss gets easy ride in Senate 27 Feb 2014 Brady Dougan was only lightly chastised about his firm helping Americans dodge taxes. Senator Carl Levin was at least as angry with Swiss and U.S. authorities. And investors don’t expect much more pain. To execs at Goldman and elsewhere, it must have looked like a cakewalk.
Investors take note: low inflation isn’t deflation 27 Feb 2014 The theory says that bonds benefit and stocks suffer during deflation. In the real world, disinflation has yet to turn into persistent price declines. Sluggish price rises are no bar to equities doing quite well, as long as there is GDP growth. It’s too early to write off stocks.
Wall Street may have lost its last DC cheerleaders 26 Feb 2014 Democrats delivered bankers a whipping after the financial crisis. More draconian regulation was only kept at bay by Republican pushback. With the GOP now calling for a big bank surcharge and a tax hike on fund bosses, the industry looks even more friendless and vulnerable.
Bursting U.S. gun bubble begins to take victims 26 Feb 2014 Fear of legislation following the Connecticut shooting drove demand for guns to absurd heights. It’s increasingly clear laws won’t be tightened. Sturm Ruger is the first to admit the emotion that fired up the bottom line has run its course. The reckoning will be painful.
Target $1 bln breach rings bell for Luddite bosses 26 Feb 2014 Combine lost Q4 sales and possible future costs, and that could be the U.S. retailer’s minimum tab for the theft of up to 110 mln customer records, Breakingviews estimates. It’s a meaningful sum for any company. There’s no excuse now for CEOs and boards to dally on cybercrime.