Companies & Funds

Boeing needs MAX insurance more than a dividend

22 January 2020

The $175 bln aircraft giant’s new CEO, David Calhoun, says he won’t cut its $4.6 bln a year dividend. Yet Boeing will burn cash as long as the 737 MAX remains grounded. Borrowing more can paper over problems, but cutting the payout would be prudent in case of further delays.

GM’s investors school Tesla’s on self-driving hype

22 January 2020

Shares in Mary Barra’s $50 bln carmaker barely budged after it unveiled its autonomous vehicle, yet the potential of similar technology helped Elon Musk’s outfit to top $100 bln in market value. Considering true self-driving remains a long way off, GM’s owners are more realistic.

Xerox’s HP bid walks, quacks like Carl Icahn

22 January 2020

The printer maker may try to oust most of HP’s directors to win support for its $33 bln merger proposal. HP’s intransigence isn’t constructive, but its board is stronger. A proxy fight could leave Xerox activist Icahn in control, with only a small share of the company.

Banks feel the heat of global warming in Davos

22 January 2020

Climate change is the hot topic at this year’s Swiss mountain gathering and financial institutions are in the spotlight. Large investors like BlackRock can force some changes. But regulatory pressure on lenders to manage the risks of a warmer planet may prove more effective.

Naspers rejig only nibbles at Tencent discount

22 January 2020

The African tech group has sold $1.7 bln of shares in its Amsterdam spinoff Prosus, whose main asset is a $150 bln stake in the Chinese web giant. Using the funds to buy back stock has merit, but Naspers will have to be bolder if it wants to close the Dutch firm’s valuation gap.

Alstom-Bombardier rail M&A would face faulty track

22 January 2020

The $11 bln French train maker and its Canadian rival are discussing a deal, Bloomberg reported. The former’s failed deal with Siemens posed more obvious EU antitrust issues, but Brussels may still balk. And synergies that rely on big job cuts in France will be politically toxic.

Sainsbury’s new CEO will need outsider’s mindset

22 January 2020

The UK grocer’s operations director, Simon Roberts, will succeed Mike Coupe in June. The new chief executive’s three decades of experience in retail will be useful. But he may have to rewrite his predecessor’s plans if he wants to deliver better returns for shareholders.

Lotte scion gets chance to inspire Korea Inc

21 January 2020

Shares in South Korea's fifth-largest conglomerate rallied after the death of founder Shin Kyuk-ho. His son, already in charge of the group, has promised aggressive restructuring. With diplomatic, legal and family spats winding down, he has space to hurry up.

How Jamie Dimon can grab Larry Fink’s green halo

21 January 2020

Now that the BlackRock boss has got serious about climate change, the focus is on his JPMorgan peer. As CEO of the biggest U.S. bank, Dimon’s sway over corporate debt gives him more power than any equity activist. Deploying it would turn his bank from laggard to leader.

Netflix investors risk ruing streaming-stock binge

21 January 2020

Reed Hastings’ firm has little if any need for TV ratings, box-office sales or ads, unlike rivals. Shareholders focus on subscriber and revenue growth, fueling its stock-market success. But a slowdown in new users and an excessive, if declining, cash burn put that under threat.

Vale dam cleanup hints at miners’ rising ESG bill

21 January 2020

The world’s top iron ore producer faces criminal charges for a deadly 2019 dam collapse. It has spent billions on reparations and safety upgrades, and seen its share price stumble. The total financial hit is yet to become clear, but other resources firms will face reckonings too.

UBS limp new targets invite investor scorn

21 January 2020

The $46 bln bank’s shares fell after CEO Sergio Ermotti announced vague returns goals. He may be cautious about low rates, or pinning his hopes on a wealth management push rather than cost cuts. If that doesn’t pay off, Ermotti – or his successor – will have to wield the axe.

China virus scare leaves bling giants exposed

21 January 2020

A deadly virus erupted ahead of the key Lunar New Year festival. Compared to the 2003 SARS crisis, the damage to luxury stocks looks modest. Yet Chinese shoppers now make up a third of the $310 bln market for high-end goods. If the disease spreads, the overall hit will be worse.

Telco IPO is only one way to paint Africa Orange

21 January 2020

The French group may float its local unit, which could be worth nearly 13 bln euros. That’ll raise plenty of cash to enter Ethiopia but isn’t CEO Stephane Richard’s only option. A mobile-tower sale would achieve the same aim, and deliver a bigger valuation boost for the parent.

China’s viral immune system open to economic pox

21 January 2020

A bungled swine flu cover-up doubled pork prices last year, taxing the poor. Now a human virus is panicking citizens before the start of what’s usually a $150 bln holiday spending boom. President Xi’s anti-corruption campaign has made officials less venal, not more credible.

BAE’s U.S. pivot can help defuse Saudi discount

20 January 2020

The $27 bln UK defence firm has bought satellite navigation and radio businesses from merger partners Raytheon and United Technologies. The $2.2 bln price looks fair. Greater sales in America, and a lesser reliance on Riyadh, should boost the Typhoon-maker’s depressed stock.

UK property’s crisis cash call tests Boris bounce

20 January 2020

Intu, the struggling landlord of retailers like Zara and Primark, is looking to raise equity to fix its $6.1 bln debt. Doing so would underpin the UK’s post-election property and stock market gains. But given the scale of what Intu needs, it may instead expose their fragility.

HDFC hiring for India’s best, hardest banking job

20 January 2020

The $99 bln lender is defying an economic slowdown to deliver 20% loan growth. Aditya Puri, who has led the institution to deliver outsize returns for almost three decades, is set to retire this year on a high note. His successor will inherit a richly valued bank with a lot to lose.

Microsoft puts climate grandstanders in the shade

17 January 2020

The $1.3 trln software firm’s plan to remove all carbon it has ever produced raises the bar for rivals seeking to appear green. Funding tech to remove atmospheric CO2 adds a multiplier effect. The only way Microsoft could improve on this would be to ditch its dirtier customers.

Huawei can afford to hang up on America

17 January 2020

The Chinese telecoms firm is fighting to keep its rural-carrier customers amid D.C. pressure. It’s a losing battle and makes little sense given the tiny contribution to Huawei’s top line. Quitting the U.S. would get rid of a headache and leave more energy for bigger conflicts.