GE’s accounting monster still lurks under the bed 8 Oct 2020 As if the conglomerate’s weak cash flows weren’t problem enough, boss Larry Culp may soon have to field an SEC lawsuit over GE’s misadventures in insurance, which long predate his arrival. A bigger problem, though, is GE Capital’s potential for creating bigger, nastier surprises.
Dan Loeb sprinkles pixie dust onto Disney’s plans 8 Oct 2020 The activist wants the Magic Kingdom to axe its dividend and direct the annual $3 bln toward its streaming service. The yield is peanuts anyway, and Disney+ is the media giant’s growth engine. Catching up to Netflix requires capital. It’s an easy ask that can make an impact.
Fantasy M&A’s latest contender: Buffett buys Exxon 8 Oct 2020 The Sage of Omaha has $120 bln to deploy on a big deal. After halving in value this year Exxon Mobil is worth only a bit more. If Buffett was interested, the oil titan might value relative anonymity in the Berkshire Hathaway empire to increasing heat from ESG-minded investors.
IBM drops weight for tough race to the cloud 8 Oct 2020 The $110 billion Big Blue is spinning off its legacy infrastructure services unit to zero in on high-margin, fast-growing cloud computing. New CEO Arvind Krishna is clearly not shackled by history. Even a more focused IBM will struggle to overhaul powerful rivals like Microsoft.
Kazakhs jump the gun with $6.5 bln fintech IPO 8 Oct 2020 CEO Mikheil Lomtadze is having a second go at floating Kaspi.kz, after pulling a listing last year. Uncertainty over bad debt and the economic effects of Covid-19 may scupper an otherwise reasonable valuation. Selling shareholders might get a better price in a year.
Corona Capital: Bankers, Virus vices, Student digs 8 Oct 2020 Concise views on the pandemic’s corporate and financial fallout: Japan’s Mizuho tries to get its employees to take it easy; smokers and gamblers struggle to kick the habit during lockdown; UK landlord Unite Group finds even student property is not immune to Covid-19.
Europe’s banks smother their fund offspring 8 Oct 2020 Asset management units at Deutsche, UBS and Natixis risk being squashed by low-cost U.S. giants like $90 bln BlackRock. M&A may help, but no banks want to sell one of the few businesses that’s resilient to low interest rates. It’s a recipe for stasis and continued low valuations.
Hedgie’s telco tilt sends louder market signal 8 Oct 2020 Asset manager Toscafund may bid for TalkTalk, valuing the UK operator at 2.1 bln pounds. At that price, CEO Martin Hughes could make a tidy return even assuming no revenue growth. With public investors wary of cash-guzzling telecom groups, the case for going private is strong.
Samsung enjoys Washington gift that keeps giving 8 Oct 2020 The South Korean giant expects quarterly operating profit to jump 58% to $10.6 bln, as U.S. sanctions forced Huawei to stockpile chips. Those sales are gravy from U.S. restrictions hitting the Chinese company. Taking its telecom gear and smartphone customers is the real prize.
Citi’s past mistakes send new CEO back to future 8 Oct 2020 A U.S. regulator has fined the mega-bank $400 mln for repeatedly failing to bring risk management and other controls up to snuff. It helps explain why gaffe-prone Citi trades at just half its book value. Incoming boss Jane Fraser will start the job fighting decade-old problems.
Macau casinos now playing for an inside straight 8 Oct 2020 China’s long holiday break has brought few visitors to the Asian gambling hub. That makes it hard to accept rosy forecasts that revenue at Sands, SJM and Galaxy will reach more than 85% of pre-pandemic levels next year. It’ll take consumer exuberance and policy help to get there.
Singapore’s bid for insolvency tourism is at risk 8 Oct 2020 The city-state picked elements of both U.S. and UK bankruptcy law to boost its attractiveness for hosting corporate workouts. But the glacial resolution of water treatment giant Hyflux could discourage the creditors the city needs to support its campaign to become a genuine hub.
AT&T needs Dish to save DirecTV face 7 Oct 2020 The satellite-TV unit could fetch an enterprise value only a fifth less than the $67 bln the U.S. cellphone giant paid five years ago. But that assumes a strategic suitor. A private equity firm buying DirectTV for its declining cash flow would probably offer under $30 bln.
Big Tech broadside is bonanza for D.C. lobbyists 7 Oct 2020 A U.S. Congress report accuses Amazon, Apple, Facebook and Google of abusing market power. Trustbusting recommendations include breakups and a merger ban. Any actual reforms will surely be heavily diluted, but the four giants now have a 450-page guide for their counterattacks.
Corona Capital: Tech upgrades, Ruby Tuesday 7 Oct 2020 Concise views on the pandemic’s corporate and financial fallout: Indian IT giant TCS is betting the work-from-home boost to its earnings marks the beginning of a years-long boom; U.S. restaurant chain Ruby Tuesday’s bankruptcy offers a lesson in creative culinary destruction.
Deliveroo’s IPO is a dish best served soon 7 Oct 2020 The UK food delivery app is mulling a float in the public market next year. Using its peers’ multiples, Amazon-backed Deliveroo could fetch more than $5 bln. But with the pandemic-induced boost to its top line not guaranteed to last, it can’t afford to dawdle.
Evergrande’s debt scares creditors into submission 7 Oct 2020 The stressed property giant persuaded investors owed nearly $15 bln to convert their obligations to unlisted shares. Details are scant, but it’s another miraculous escape for founder Hui Ka Yan. The deal looks crummy, and it highlights how real estate has trapped policymakers.
Politics may turn bankruptcy wave into a tsunami 6 Oct 2020 U.S. Chapter 11 filings are up by a third this year, with small firms flailing and billion-dollar bankruptcies above 2009 levels. But total filings – including personal and business – are down almost 30%. Stimulus has kept many afloat. Political gridlock may open the floodgates.
Clover Health takes knife to two sick systems 6 Oct 2020 The insurer reckons if doctors had better data, Americans’ medical bills would be lower. So its job of cutting the fat in a market stuffed with middlemen has promise. It’s apt, too, that Clover is listing via a so-called SPAC, a structure that takes the same approach to finance.
Daimler drives into faster lane with luxury refit 6 Oct 2020 The German automaker plans to cut costs by 20% at its Mercedes brand by 2025 and double sales of Maybach luxury cars. Hitting the goals could grow operating profit by nearly two-thirds. Even so, boss Ola Kaellenius may at best catch up with, rather than overtake, rival BMW.