Elon Musk pay deal is crazy enough to get the nod 20 Mar 2018 The Tesla boss could collect nearly $60 bln over 10 years. That’s excessive and surely unimportant for motivation. Yet it’s built on PR-stunt targets involving sales, EBITDA and market cap exploding 10-fold or more. For investors voting on the plan, it’s like playing the lottery.
Europe’s data tax war is worthy but hard to win 20 Mar 2018 The EU may tax tech groups’ revenue. The bloc is right to argue that current rules overlook the value firms like Google extract from its citizens’ data. A crude levy on sales is far from perfect, but might add impetus to longer-term international reform efforts.
Private equity goes back to dangerous superlatives 20 Mar 2018 Strong buyout returns have investors putting more money than ever into funds that acquire companies with loads of debt. But deal multiples are nearing record highs, too. As legacy LBOs like Toys R Us and Claire’s go bust, it’s a reminder of the industry’s tendency to overheat.
Michelin’s $1.7 bln UK rubber deal stretches logic 20 Mar 2018 The French tyre maker is buying conveyor-belt group Fenner, whose clients include miners. Michelin should be able to flog more products in Asia and South America, and drive harder bargains with suppliers. Even then, it will struggle to earn an acceptable financial return.
Mile-high stake swap could feed Air India bid 20 Mar 2018 Jet Airways may be interested in the soon-to-be privatised national carrier. However, Naresh Goyal’s airline would need serious financial help to make an offer fly. Abu Dhabi’s Etihad may need to make room for a new large strategic investor.
China’s regulatory mega-merger howls for synergies 20 Mar 2018 Uniting banking and insurance oversight while consolidating the work of other ministries should relieve burdens Beijing puts on private enterprise. Big layoffs would be an important next step for the new regime. Idle paper-pushers have grown too fond of mindless crackdowns.
D.C. subway could ride Hong Kong’s MTR 20 Mar 2018 The Washington Metro's equipment and safety woes are a smoking symbol of U.S. infrastructure ineptitude. Market-based fixes would be wise. Other cities have hired Hong Kong's mass-transit provider for help, but its property and punctuality playbook also may be replicable.
Facebook gives members one more reason to leave 19 Mar 2018 An election consultant’s use of 50 mln profiles creates fresh risks at a company reeling over fake-news and ad-measurement mishaps. Users have plateaued in key markets and people are spending less time on the social network. The danger is that members may unfriend it altogether.
Icahn-Newell pact clarifies Starboard’s value 19 Mar 2018 The maker of Sharpie pens and Crock-Pot cookers is giving the investor’s firm four board seats, including chairman, and handing it control of divestitures. Icahn’s entry confirms Starboard’s line that Newell needs an overhaul, while showing his fellow activist’s strategic limits.
Activist’s Barclays punt hinges on investment bank 19 Mar 2018 Edward Bramson’s Sherborne Investors has amassed a 5.2 pct interest in the UK bank. Some of Barclays’ problems – a CEO under investigation and legal issues – are short-term. A repeat of Bramson’s recent successes will hinge on turning around Barclays’ misfiring investment bank.
Struggling Micro Focus haunted by Autonomy’s ghost 19 Mar 2018 The UK tech group, which paid $8.8 bln for Hewlett-Packard software assets, lost half its market value after saying the CEO had quit and sales could fall 9 pct. If that looks an overreaction, the woeful history of the business previously known as Autonomy helps explain the gap.
French bid puts Hammerson UK retail push in doubt 19 Mar 2018 The British shopping centre operator has rejected a 4.9 bln pound approach from European rival Klepierre. The 20 percent discount to Hammerson’s net assets looks opportunistic. But it also highlights investors’ doubts about the UK group’s punt on domestic peer Intu Properties.
Alibaba presses its advantage in Southeast Asia 19 Mar 2018 The e-commerce giant is pumping $2 bln more into regional subsidiary Lazada, and replacing the group’s founder-CEO with Alibaba veteran Lucy Peng. Armed with her fintech expertise, Lazada can use mobile payments to entrench its regional lead over rivals Amazon, JD and Sea.
China Literature results could use more drama 19 Mar 2018 Tencent's $10 bln e-books arm reported strong debut numbers as a public company, with sales up 60 pct. But user growth is slowing, and hype over turning historical novels and kung fu epics into hit movies has yet to deliver. A lofty valuation requires a bit more excitement.
Zuckerberg is making a worrying passel of enemies 19 Mar 2018 The alleged exploitation of 50 mln Facebook profiles by political consultant Cambridge Analytica compounds the $540 bln social network's woes, as it contends with other backlashes. U.S. and UK legislators want to hear from founder Mark Zuckerberg now. He may be in over his head.
Legal truce a Wynn-Wynn solution for casino empire 16 Mar 2018 Steve Wynn may sell his stake in the casino operator after settling a lawsuit with his ex-wife. It makes sense now that he’s been turfed out as CEO, but regulatory, legal and valuation issues could deter many buyers. That leaves the deck stacked in favor of Elaine Wynn.
Elliott’s Italian master plan needs state player 16 Mar 2018 The activist fund wants to oust top investor Vivendi from Telecom Italia’s board and sell its network. A stand-alone telco backbone might attract a higher valuation and be able to shoulder more debt. However, success hinges on state-backed investor CDP’s readiness to chip in.
Review: The pitfalls of managing by measurement 16 Mar 2018 Excessive dependence on quantitative indicators has long caused trouble. Yet as Jerry Muller shows in “The Tyranny of Metrics”, a fixation with targets still distorts the behaviour of teachers, doctors and executives. Though data matters, it’s no substitute for judgment.
Li Ka-shing’s exit ushers in new era for tycoons 16 Mar 2018 The Hong Kong magnate built a property-to-telecoms empire. At 89, Li retires as the city faces economic and political uncertainty, while protectionism globally is on the rise. For his son and successor, Victor Li, replicating the returns his father delivered will be tough going.
Michael Spencer tunes up for markets swansong 16 Mar 2018 The NEX chief executive is in talks to sell the London-based electronic broker to Chicago’s CME. Despite uncertainties caused by Brexit, shareholders have done well since Spencer offloaded the voice-trading unit in 2016. If other exchanges join in, they could gain even more.