Mobile deal exposes lack of security in M&A 22 Jan 2014 The $43 bln VMware, backed by EMC, is buying closely held AirWatch for $1.5 bln. Expanding beyond the competitive business of virtual servers makes sense. But the target’s troubles with Los Angeles schools provide a red flag about jumping into ultra-hot mobile and security.
U.S. digital privacy law more Commodore than Apple 22 Jan 2014 New cases at the Supreme Court suggest rules on police cellphone searches are in for a welcome overhaul. Limits on hackers and national security snoops could also use an update. Squeezing high-tech advances into old-world constraints risks making Uncle Sam look like Big Brother.
Bosses’ forgone bonuses won’t fix what ails IBM 22 Jan 2014 Revenue has now shrunk seven quarters in a row. Security concerns in China have dented hardware sales. But IBM’s huge consulting business is in disarray and its software unit under pressure. Paid or not, CEO Ginni Rometty’s long-range earnings targets seem delusional.
Loeb wrestles Sotheby’s over new art paradigm 22 Jan 2014 The activist reckons the listed auctioneer should be more like private rival Christie’s, which leads in hot contemporary art and is embracing lower-value lots and new buyers. Sotheby’s has stuck to bigger-ticket items. But its upcoming review needs to address the changing market.
Edward Hadas: Bitcoin repeats gold-standard errors 22 Jan 2014 The popularity of the pseudo-currency is a sign of economic amnesia. If bitcoin - with limited supply and without government support - were the only currency, it would suffer from the problems of the old hard-money system. The result would be unnecessary panics and crises.
Dropbox $10 bln valuation looks in the clouds 21 Jan 2014 VC funds brave enough to make late-stage investments in the likes of Facebook and Twitter did well. Now BlackRock and others have bet $250 mln on Dropbox. But there’s room for plenty of competitors in online file storage – and that could mean a very different outcome.
Mexico can teach Brazil a constitutional lesson 21 Jan 2014 Until Peña Nieto came along and revised Mexico’s governing document, the state oil giant was destined to hold back the economy. Now Pemex can accept foreign funds. Brazil faces a similar problem with its outsized pensions. Bold politics would avoid a tough decade like Mexico’s.
Dan Loeb puts the right accelerant in Dow Chemical 21 Jan 2014 The activist investor wants the company to hive off its petrochemicals unit, a more aggressive move than CEO Andrew Liveris has hinted at. Loeb’s analysis looks optimistic, but a sum-of-the-parts analysis suggests merely breaking up Dow could boost its value by a fifth.
Fracking’s big benefit may be steadier oil prices 21 Jan 2014 Despite a price slide since the year-end, crude volatility is at 20-year lows. One explanation is the U.S.-centric shale boom. There’s more oil around, and drillers can respond more quickly to price moves. A damper on price swings should help companies and governments plan ahead.
Wealth Addicts Anonymous? It misses the point 20 Jan 2014 Ex-trader Sam Polk says that money-sucking finance types should meet up to get a grip on their bonus addiction. If such support groups are needed, meetings should start with a firm lecture on why greed is not good. But there’s a better way – common-sense pay regimes.
James Gorman gives investors rope to hang him with 17 Jan 2014 Morgan Stanley’s boss offset another rough quarter that included a 1 pct return on equity by laying out targets to finally make some half-decent coin. They look reasonable enough, but the bank has failed to deliver before. Gorman’s fifth year at the helm should be make or break.
Ex-Tyco chief’s release puts prosecutors on spot 17 Jan 2014 After more than eight years doing time, Dennis Kozlowski has paid his dues. Wall Street honchos haven’t. Their firms have been punished instead, at a high cost to investors and staff. Lucrative settlements and elusive proof don’t ease doubts about the government’s record.
Citigroup needs to channel boardroom aggression 16 Jan 2014 The mega-bank is alone among peers in missing estimates so far despite having its best year since 2006. It leaves Citi with a weak return on equity and market valuation. Mike Corbat, who rose to power via a harsh coup, can’t rely on cost cuts. He’ll have to scrap for revenue.
Gas deal means Brazil can also be seen from Alaska 16 Jan 2014 Sarah Palin’s gubernatorial successor has signed a deal for the state to take an equity stake in a $45 bln LNG project. The Last Frontier seems the last place likely to get entangled Latam-style with Exxon, BP and others. Oil production is falling, though, leaving fewer options.
Goldman ekes profit wind out of doldrums 16 Jan 2014 The Wall Street heavyweight’s top line barely budged last year, thanks to disappointing bond trading. And Lloyd Blankfein’s firm added staff. Yet net income jumped 8 pct on the back of cost cuts, not least Goldman’s new-found religion on pay. That’s something for shareholders.
Unemployment insurance wrong tool for tougher task 15 Jan 2014 Emergency relief made sense in the midst of the financial crisis. But a rising number of long-term jobless requires another approach. Training and incentives to relocate might better address structural workforce issues. They won’t come cheaply, but the investment could pay off.
Supreme Court’s iffy economics cheat investors 15 Jan 2014 The top U.S. tribunal assumes prices of listed shares reflect all public data - even lies. That allows owners of widely traded stock to sue en masse for fraud but cuts out others. A Halliburton lawsuit gives the justices a chance to rethink the rules and focus on duped investors.
BofA on a roll, but investor zeal looks overdone 15 Jan 2014 Bumper results in wealth management and global banking helped the bank run by Brian Moynihan earn $3.4 bln. That’s just shy of a 10 pct equity return even with big legal costs. But it relied on a very low tax rate. BofA is rebounding, but setbacks are still possible.
Edward Hadas: Madoff/subprime – spot the difference 15 Jan 2014 The fraudster’s rise and fall has alarmingly close parallels to any story of financial boom and bust. Greedy investors rush to a hot manager, but his promises prove empty. Ironically, Madoff’s dupes will ultimately suffer less than legitimate subprime investors.
U.S. natural gas price finally reaches safety zone 15 Jan 2014 At near $4.50 per mln Btu, drillers can turn a profit on gas after several painful years. Cold weather has helped push up the price, but with demand rising it’s more than a blip. Meanwhile, production costs have come down. The likes of Exxon and Chesapeake can breathe easier.