Boeing loses when it has everything to gain 8 Jan 2024 The $138 bln plane maker's business should be unreplaceable. Two firms dominate the expanding business, both run production at max capacity, and customers can’t easily switch. But repeated issues are undermining more than Boeing's reputation. Its finances are worsening, too.
SpaceX beats Tesla in business model bakeoff 7 Dec 2023 Elon Musk’s rocket company is seeking a $175 billion valuation, just one-quarter as much as his electric-vehicle firm Tesla. Yet viewed from space, based on some old-school measures of competitiveness, it’s the smaller firm that has the more solid foundations.
Capital Calls: Shein/Forever 21 24 Aug 2023 Concise views on global finance: The Chinese retailer is partnering with Sparc, the operator behind Forever 21. That helps validate Shein before a public listing without the messiness of a merger. Forever 21 gets a new omnichannel and potentially a way to an IPO.
Capital Calls: Satellite M&A crash landing 22 Jun 2023 Concise views on global finance: SES and Intelsat’s decision to call off merger talks leaves the Luxembourg-based group with a $3 bln puzzle.
Capital Calls: Virgin Galactic 16 Jun 2023 Concise views on global finance: Shares of Richard Branson’s space tourism company rocketed 30% higher on news it would launch its first commercial flight in two weeks. The customer demand required alongside competition from Elon Musk and Jeff Bezos make the valuation a moonshot.
Italy’s Leonardo risks missing defence bonanza 3 May 2023 The $7 bln Italian electronics and helicopter group, 30%-owned by the state, trades at a discount to peers. Leonardo is not fully capitalising on rising EU military budgets after the Ukraine war. Investor support to add external expertise to the board is sorely needed.
Richard Branson advances the science of SPAC holes 4 Apr 2023 Virgin Orbit, one of more than a dozen space-related outfits to go public since 2019, mostly by way of shell companies, has declared bankruptcy. On average, these stocks have lost 75% of their market value. Rapid incineration of capital means plenty of others will flame out too.
TCI’s Airbus fury may have collateral benefit 22 Feb 2023 Hedgie Chris Hohn says the plane maker’s plan to buy a 30% stake in Atos’s cyber arm will destroy value. He’s probably right, but private investors take a back seat in defence deals, where governments call the shots. His salvo might however help Airbus drive a harder bargain.
Feedback loops power Elon Musk’s SpaceX 16 Nov 2022 Even as tech valuations fall, including that of Tesla, the rocket maker’s may rise 20%, to $150 bln. Its growing Starlink service is more appealing than lunar expeditions. The bigger the satellite business gets, the worse the economics become for rivals such as Amazon.
Capital Calls: Stratospheric SPACs 16 Sep 2022 Concise views on global finance: A slew of space firms have gone public in deals with blank check firms, only quickly to fall back to Earth. Intuitive Machines has a better shot at staying aloft, thanks to government contracts.
Review: Pandering to Beijing has shrinking payback 1 Apr 2022 One difference between the Cold War and current Sino-U.S. tensions is the crowd of capitalists rooting for the communists. In “America Second,” Isaac Stone Fish lambasts the CEOs and lobbyists who take China’s side. Yet the return on sucking up, never high, is falling sharply.
Musk’s D.C. reset sets dubious precedent 7 Mar 2022 The SpaceX boss has irked lawmakers, battled watchdogs, and even insulted the U.S. president. Offering internet access to Ukraine may catapult him out of villain status. His help is welcome now. But allowing Musk’s finger on the diplomatic scale may have unintended consequences.
GE breakup is common sense, at least in theory 9 Nov 2021 Carving up the $120 bln conglomerate is no longer the drastic step it would have seemed under CEO Larry Culp’s predecessors. After Culp’s cleanup, three separate, more focused businesses could be worth more. But financial engineering often disappoints – especially at GE.
Drahi drags satellite M&A into near-earth orbit 4 Oct 2021 France’s Eutelsat rejected the telecom billionaire’s $3.2 bln bid. If a follow-up offer succeeds, Drahi could pursue a cost-saving merger with rival SES, whose TV-signal business is also succumbing to gravity. A chunky spectrum refund from the U.S. government makes a deal easier.
Capital Calls: UK interventions, Post-virus reset 7 Sep 2021 Concise views on global finance: U.S. bidder TransDigm’s withdrawal from the $8.7 bln race for Meggitt removes a tricky decision for the government; Boris Johnson’s new proposals will address social care but not generational wealth divides.
Meggitt arm-wrestle is test for UK interventionism 3 Sep 2021 TransDigm’s 7 bln pound approach for the aerospace engineer is higher than rival Parker Hannifin’s but uses way more debt. PM Boris Johnson has been active in probing M&A that could affect jobs or national security. But intervening on leverage grounds would be a new departure.
Branson’s second space SPAC draws awkward parallel 23 Aug 2021 Virgin Orbit, an offshoot of Galactic, inked a blank-cheque deal valuing it at $3.2 bln. With just three successful satellite launches, the projections are a leap of faith. But Orbit is using Galactic’s inflated multiples for validation. It underscores SPACs’ otherworldliness.
UK plc’s latest sale is far from on the cheap 2 Aug 2021 Ohio-based engineer Parker-Hannifin is buying British rival Meggitt for 7 bln pounds including debt. The 70% premium and promises to keep UK jobs point to measly long-term returns. UK investors’ complaints about opportunistic foreign raiders look less and less credible.
GE chief accepts the things he cannot change 27 Jul 2021 Larry Culp’s monomaniacal quest to make his $120 bln conglomerate “lean” is paying off. GE’s cash flows are improving. But Culp can’t do anything about shifting tides of customers’ behavior. Investing in GE also requires getting comfortable with the things Culp can’t control.
Shareholders exposed by British defence raid 23 Jul 2021 Some UK investors complain private equity buyers are stealing listed groups. A mooted 2.6 bln pound bid for Ultra Electronics by Advent-owned Cobham suggests otherwise. The buyer needs chunky cost savings to make it work. A 62% premium implies the market misjudged Ultra’s value.