U.S. jobless figures not as bad as they appear 7 Feb 2014 While the January establishment survey showed only 113,000 new jobs, the household survey showed 616,000 jobs created net of end-year adjustments, the labor force rose and the unemployment rate fell to 6.6 pct. The economic recovery is still strengthening, if in slow motion.
Coke and David Einhorn sing in perfect disharmony 7 Feb 2014 To feel good spending $1.3 bln for a minority stake in Green Mountain Coffee, the soft drink giant must have answered some nagging questions posed by the hedge fund manager in 2011. Investors seem to reckon Coca-Cola did its diligence. P&G and HP have shown how much it matters.
Return to U.S. workforce of old a mixed blessing 6 Feb 2014 The 6.7 pct jobless rate is flattered by low participation. A return to the 2006 level would mean 8 mln more job-seekers. But that’s not realistic. Sure, boomers could retire sooner. But as a Breakingviews calculator shows, demographics, college and disability work the other way.
SAC case stars on Broadway but Chicago steals show 6 Feb 2014 New York prosecutors added a notch to their belts with the conviction of Mathew Martoma. Of course, it’s also a reminder that his boss Steve Cohen has slipped away. And the case doesn’t help define fuzzy insider trading rules. An Illinois verdict accomplishes more on that front.
3D printing starts to look one-dimensional 6 Feb 2014 Technological hype, an acquisitive strategy and a pop star combined to build 3D Systems into a $10 bln company. A gloomy forecast, though, sent its shares tumbling another 15 pct. The industry is finding it’s easier to manufacture excitement than earnings.
General Motors, analysts both have egg on faces 6 Feb 2014 The automaker missed Q4 estimates by a mile. Some overseas markets are a concern, but most of the shortfall stems from restructuring charges, not a slump in business. These ought to have been known in advance. Either GM’s failing to communicate or analysts aren’t listening.
Twitter a victim of its own measure for success 6 Feb 2014 The social network is growing and mining lots of user dollars, but not enough to justify a whopping value of 30 times sales. The lofty figure rests on a rise in the company’s touted home brew of “timeline views.” That number’s falling, suggesting tweeters are losing interest.
Green Mountain puts Coke in home brewed soda race 6 Feb 2014 Partnering with the single-serve coffee maker gives Coca-Cola a way into a fizzy new market. Sales of traditional soda are down, but upstart SodaStream proved some thirsty customers want to make their own. Coke syrup in Green Mountain capsules could be a profitable mix.
Chinese e-commerce IPO more Amazon than Alibaba 6 Feb 2014 JD.com has filed for a U.S. listing ahead of its bigger rival. The online retailer has a different strategy and is barely breaking even. Like its Seattle role model, the bet is that expansion now leads to future earnings. To keep growing, JD.com will need capital to keep flowing.
HBO gives Netflix investors a grim sneak preview 5 Feb 2014 Time Warner disclosed financial details of the pay-TV network behind “Girls” for the first time, which imply it is worth about $17 bln. Netflix already trades at a 40 pct premium to its stronger, more mature rival. That suggests a need for heroic growth and profit assumptions.
Puerto Rico malaise makes debt a game of chicken 5 Feb 2014 The beleaguered island territory wants to borrow $2 bln, implying bondholders still see some value. But job losses are up, people are leaving in droves, balancing the budget without layoffs looks fanciful and debt costs are high. Puerto Rico bonds are not for the faint of heart.
Lazard puts M&A feet firmly in big boys’ camp 5 Feb 2014 The Wall Street firm didn’t just hit its operating margin targets for 2013. Like JPMorgan and Morgan Stanley, its bankers also raked in bumper revenue in the second half of the year as bigger deals picked up. Smaller rivals Evercore and Greenhill, meanwhile, couldn’t keep up.
Edward Hadas: Apple, banking and taxpayer subsidy 5 Feb 2014 Why does Apple have such high profit? Why does the banking system have a tendency to fail? The answer is the same: taxpayers subsidise business risks but the rewards aren’t fairly distributed.
Quitting tobacco, CVS has a Don Draper moment 5 Feb 2014 Like the “Mad Men” protagonist, the drugstore chain has made a highly publicized and well-orchestrated virtue of a moral necessity. Pulling cigarettes from shelves will cost just 17 cents a share. But the healthcare bona fides against rivals like Walgreen can offset the hit.
Apple ripe for win over e-books antitrust monitor 4 Feb 2014 The iPad maker claims a judge-imposed overseer is not only costly and disruptive but blatantly unconstitutional. It’s a persuasive argument, akin to ones that doomed the independent counsel role of Iran-Contra fame. A U.S. court of appeals has the opportunity to say so.
The first $1 million drug may be a bargain 4 Feb 2014 An approved gene therapy by uniQure, whose IPO is slated for this week, has an eye-popping cost. It could eliminate a lifetime of hospital trips for sufferers of a rare disease, but it’s hard to say because so few patients have been tested. Even so, it may be rationally priced.
Microsoft founders recede into middle distance 4 Feb 2014 Satya Nadella’s experience makes him a solid CEO choice. He also has greater room to maneuver as Bill Gates steps down as chairman. He’ll need to grapple with bad decisions, like the Nokia deal, and is unlikely to pursue a breakup. But he can focus on what the company does best.
Don’t blame the economy for melting markets 4 Feb 2014 Small-country troubles, shaky Chinese demand and a few U.S. disappointments would not normally be enough to push investors into fear mode. The current volatility proves what a difference a tapering Fed makes to the health of financial markets.
John Malone’s drive for F1 shows value of sport 4 Feb 2014 The cable tycoon offered to buy a stake in Formula One last year. His recent focus has been on distribution, not programming. But the taste for motor racing highlights live sport’s must-have status in content. If he wants it, he can expect an auction and a $10 bln-plus valuation.
TPG’s bitter coffee should wake up private equity 4 Feb 2014 David Bonderman’s shop and Israel’s Strauss family are feuding over their java joint venture. Buyout firms prefer control for good reason, though it isn’t always possible. While the payoffs from different ownership structures can be big, the risks are often commensurate.