Amazon and Apple’s historic paths collide 28 Sep 2011 The online retailer’s cheap new Kindle Fire tablet reflects the company’s roots - it’s a tool for the sale of content. Apple, by contrast, used music and movies to hook customers into buying its gadgets. The two currents are now clashing, and survival requires strength in both.
Auto workers adapt to life as Motown shareholders 28 Sep 2011 The new UAW contract with GM eschews the overly generous benefits of the past for more measured terms. Deals with Chrysler and Ford may be tougher. But Detroit’s near-death experience and the UAW’s stakes in two of the big three have taught the union the benefits of restraint.
Stock market crash more likely than new recession 28 Sep 2011 One ratio of U.S. stock market value suggests it’s expensive compared to 1995, a middling year. Low interest rates and a weak dollar have boosted profits while rapid money growth has juiced valuations. More normal monetary policy could make the market crash - without a recession.
Turmoil leaves Asia Pacific facing dollar drought 28 Sep 2011 Strong government finances and exports in the region aren’t enough to offset the reversal of Western investment. While some countries can draw on huge reserves, others like South Korea and Australia are facing a dollar shortage and potentially destabilizing currency declines.
Anna Nicole gives Wall St. a lift from the beyond 27 Sep 2011 The late Playmate’s U.S. Supreme Court case made it easier to shift suits from bankruptcy to federal court. That may help JPMorgan’s case over Lehman’s demise and ding the Madoff trustee’s search for redress. The centerfold may have given as much to the law as to Playboy readers.
Latest tech valuation evokes bad dot-com memories 27 Sep 2011 Tumblr’s funding round values the popular blogging site at $800 mln. The service is growing fast, but there’s precious little revenue. While that makes profitless dot-coms relying on sales multiples look good by comparison, valuing eyeballs again is bad for tech.
Richest Brazilian talks his book on protectionism 27 Sep 2011 Eike Batista thinks the U.S., like Brazil, should shield young industries from overseas competition. But it’s hard to take him very seriously when it’s his wallet talking. Batista’s oil rig-building firm, OSX, is placed to be a big winner from his country’s local content rules.
P&G’s Pringles partner warrants careful taste test 26 Sep 2011 The consumer giant wants investors to swap P&G stock for shares in Diamond Foods as part of a $2.4 bln deal to offload the chips brand. But financial wrinkles and angry walnut growers are among possible concerns. P&G holders may want to check the contents of the package closely.
Global SWAT team needed to close tax loopholes 26 Sep 2011 Tax-based financing deals like those between U.S. and UK banks being targeted by U.S. authorities use legal mismatches to reduce tax bills. They are lucrative, but have no economic value. Such questionable arrangements might be best tackled in a focused multilateral forum.
U.S. courts make death arbitrage a tougher game 26 Sep 2011 Cashing out life insurance can keep a policyholder afloat if he suddenly needs the cash. But an active secondary market tempts some to buy insurance just to sell the policy on. Delaware judges have wisely made such ghoulish bets on life expectancy easier for insurers to kill.
Pro-cyclical Wall Street protesters missed moment 26 Sep 2011 Those marching against finance have failed to build on the rallying cry that began five years ago. Since the crisis started, shareholders and regulators have already pummeled the banks. These rabble-rousers should have arrived earlier - or waited for greed to truly return.
Berkshire buyback a move best left to Buffett 26 Sep 2011 The Sage’s conglomerate has taken the highly unusual step of repurchasing shares, at up to a 10 percent premium over book value. It doesn’t mean it’s a strategy to be followed, though. If shares of other companies were truly undervalued, Berkshire probably wouldn’t be buying its own.
Gates helps put Tobin tax back on G20 agenda 26 Sep 2011 Support for a financial transaction tax from America’s richest man won’t sway opponents like the UK. But it makes it easier for France and Germany to go ahead, even if the funds raised aren’t all used for aid, as Gates hopes. Curbing financial churn may prove just as alluring.
IMF’s dovish turn may be seen as favor to the rich 26 Sep 2011 The fund has long been a tough schoolmaster on fiscal probity. This softened after 2008 and now the IMF is proposing still more stimulus in some nations. This makes economic sense but opens the fund to charges that it pushes Keynesianism for the rich and monetarism for the poor.
Patent spats getting pricier for tech shareholders 23 Sep 2011 The likes of Apple and Samsung are spending millions to sue each other. But new research shows it’s the trolls that own little more than legal rights to inventions levying the heftier toll on investors and innovation. It’s more evidence of why patent law needs to change.
Misguided share buybacks at least help Wall Street 23 Sep 2011 Companies don’t often time stock repurchases well for their own accounts. But the roughly $500 bln expected this year couldn’t come at a better juncture for ailing investment bankers. IPOs and other new equity deals have slumped, so even paltry fees on buybacks will be welcome.
UBS, Yahoo and HP have made failure traditional 23 Sep 2011 The Swiss bank’s $2 bln rogue trading loss echoes its U.S. mortgage misadventures while persistent strategic drift led the two tech companies to chuck out their bosses. All three have self-images that are badly out of date. Few companies can recover from this cognitive disorder.
Bank paperwork snafus trap Uncle Sam in mortgages 23 Sep 2011 Fannie Mae and Freddie Mac’s past failures make them easy targets. But the pile of lawsuits against private sector banks, notably over mortgage servicing, suggests they’re not yet ready to replace the government - at least until legal action, time and effort scrape away the rot.
Meg Whitman is unjustifiable choice for HP CEO 22 Sep 2011 The former eBay boss only joined the tech company’s board this year. The feckless body has ousted three previous outsiders, damaging HP each time. Whitman’s experience in hardware and business software is limited. Her powers of persuasion will take HP only so far.
Fed’s Twist puts Wall Street in a spiral 22 Sep 2011 Extra stimulus pushed 10-year Treasury yields to a new low and could leave them under 2 pct for a while. That doesn’t just crimp interest margins for retail banks; it also squeezes already struggling debt traders. Financials now look nothing but a super-long-term investment.