Companies & Funds

Telecom Italia is sending the right signals

21 February 2019

New CEO Luigi Gubitosi wants to share infrastructure with rivals Vodafone and Open Fiber to cut costs. The approach is sensible given Italy’s slowing economy and growing competition. Begrudged top investor Vivendi will find it harder to regain board control next month.

Viewsroom: Brexit breakups

21 February 2019

Foreign carmakers are closing some UK plants as lawmakers defect from both the Labour and ruling Tory parties. How will this affect the looming deadline to quit the EU? Plus: Vegan diets are more than a fad.

Goldman credit card blends logic and hubris

21 February 2019

Teaming up with Apple to put plastic in wallets gets the Wall Street firm into a business with attractive returns. The mix of elite brands and technology should help the experiment along. But the bank has limited experience, and rivals won’t give up millennials without a fight.

Franco-German industry push sullies EU principles

21 February 2019

The two biggest euro zone countries want to limit the European Commission’s antitrust powers, and subsidise strategic sectors. Their fear of Chinese dominance is fair. Yet the reforms may help governments to prop up national champions, and undermine the bloc’s single market.

Activists turn guinea pigs in drug M&A trials

21 February 2019

Starboard is targeting Bristol-Myers’ board after its $74 bln Celgene deal. Appaloosa is pushing $46 bln Allergan to fix its problems or sell. They’re using standard activist tactics. But Big Pharma’s size and complexity have long provided some immunity to such attacks.

Centrica starts to radiate bid target status

21 February 2019

The UK’s biggest energy supplier slumped after warning of a hit from a state price cap. Centrica is a random mix of retail customers, nuclear, gas and new tech. But its halving in value since 2017 offers a way for utility wannabes like oil majors to quickly bulk up.

Barclays has new ammunition for Bramson fight

21 February 2019

The bank’s fixed-income business outperformed Wall St peers in the fourth quarter. That’s a blow for activist investor Edward Bramson who wants to shrink the unit. But CEO Jes Staley has limited room to gloat: returns are below the cost of capital and the expense target slipped.

GAM employees outperform shareholders

21 February 2019

The scandal-hit Swiss fund group has lost three-quarters of its value in a year. Senior management’s bonus bill has nearly halved. A desire to hang onto staff in a crisis explains the relatively generous payoff. In asset management, shareholders bear more of the risks.

Nissan would be better off with its own chairman

21 February 2019

A panel enlisted by the Japanese carmaker opposes replicating the corporate governance model used under Carlos Ghosn. Uniting with Renault makes sense in the long run, but for now two separate board chiefs will be more effective at cleaning house and rebalancing the relationship.

European telco giants are cheap for a reason

21 February 2019

Deutsche Telekom, Orange and Telefonica appear undervalued relative to the past five years given their rising sales, stable EBITDA margins and M&A options. But they look less of a bargain once hefty network investment needs and the possibility of low returns are taken into account.

Agarwal’s Anglo carve-up has a new stumbling block

21 February 2019

The Indian tycoon’s rent of a fifth of the mining group’s shares implies he might want to lobby for a breakup. To do so he’ll need to get Anglo American’s next biggest investor, South Africa’s state pension fund, on side. That’s beginning to look less and less likely.

Man City’s long game in China can yield a win

21 February 2019

A consortium including the Manchester soccer club’s owner has acquired third-tier Sichuan Jiuniu FC. It's a modest punt, and the first by a Premier League heavyweight in the mainland game. Local allies and experience in multiple countries set the buyer up for financial success.

Storms won’t keep Qantas from higher flight path

21 February 2019

Australia's flag carrier said fuel costs pulled first-half earnings down by nearly a fifth to $559 mln. Domestic business proved resilient, though; its fleet and balance sheet are in good shape too. Choppy weather lies ahead, but Qantas looks sturdier than higher-valued rivals.

Lenovo’s reboot could run low on battery

21 February 2019

Quarterly pre-tax earnings more than doubled from a year earlier, confirming a turnaround at the world's top PC-maker. That's mostly powered by cost cuts in the $9 bln group's handset and server units. With demand cooling for both, this comeback may prove difficult to sustain.

University endowments are study in U.S. inequality

20 February 2019

With public funding for higher education waning, institutions depend on investments more than ever. Yet most have small endowments and lack access to areas like private equity. The likes of Harvard and Yale face new taxes and ebbing returns, but their riches can cushion the pain.

Three digital ad giants are no better than two

20 February 2019

Google and Facebook’s combined share of U.S. online advertising is poised to fall for the first time this year. The reason: Amazon is taking a bite out of their slice. Even a muscular challenger does little to reduce the case for tighter regulation.

Scale is no easy remedy for CVS price pressures

20 February 2019

The pharmacy firm slashed its profit forecast due to a squeeze on reimbursements and slower drug-price growth, wiping $7 bln off its market value. Buying Aetna was supposed to help it cut costs and improve patient outcomes, but that’s harder than banking on healthcare inflation.

South African power bailout puts consumers on hook

20 February 2019

A $4.9 bln government lifeline is the bare minimum needed to keep indebted utility Eskom afloat. Likely union resistance to mass layoffs means consumers will have to swallow higher electricity costs. President Cyril Ramaphosa can only hope hikes are delayed beyond a May election.

Hadas: Profit and innovation go different ways

20 February 2019

American companies are being less inventive, in part because productivity-boosting breakthroughs are more expensive. In theory, this should lead to stiffer competition. In reality, corporate earnings have kept rising. This makes no economic sense – and brings political risk.

Glencore treads fine line between green and black

20 February 2019

CEO Ivan Glasenberg will keep coal output at current levels. That’s surprising for a miner which makes a third of group EBITDA from the pollutant. But given the company’s various other hard-to-solve regulatory headaches, bringing ESG investors onside is a logical proactive step.