GSK’s new CEO held hostage by dividend cult 26 Oct 2017 The British pharmaceutical company’s market value slid by 6 bln pounds after Emma Walmsley suggested big deals and dividends might not be compatible. Being flexible is perfectly rational – unlike investors craving for high payouts at the potential expense of growth.
Banks draw short straw from ECB 26 Oct 2017 The central bank will trim its monthly bond purchases but promised to keep buying for longer. That balances the demands of those who oppose money printing with the wishes of rate-setters who fear growth is still fragile. The losers are banks, whose negative rate pain will endure.
Twitter’s credibility is for the birds 26 Oct 2017 Jack Dorsey’s social network had to restate user numbers for three years. Quarterly ad revenue fell a whopping 8 pct. However, a promise of coming profitability has put investors in a tizzy. Cutting costs is a start, but it’s going to take more to mend Twitter’s broken wings.
Lazard is the best of an unlikely listed bunch 26 Oct 2017 The merger-advisory firm’s quarterly revenue beat expectations. The spread between rivals who are doing well and those who aren’t, like Greenhill, is widening. But it’s not clear why investors should want to own shares in such choppy businesses, or why boutiques really need them.
Comcast earns its peacock feathers 26 Oct 2017 The $170 bln U.S. media firm was early and careful expanding beyond cable pipes. Two examples are its purchase of NBC Universal and its recently launched wireless service. Comcast stock has trounced Verizon and AT&T. Brian Roberts’ company has even topped Disney’s market cap.
Jes Staley gets no due for new-look Barclays 26 Oct 2017 The UK bank’s boss heralded the end of major restructuring on Oct. 26. Investors – who sent the shares down 7 percent on weak third-quarter results – aren’t convinced. At a deep discount to book value, Barclays offers decent upside if Staley can hit his modest return targets.
Sliding investment bank pressures Deutsche CEO 26 Oct 2017 The German lender’s net revenue dropped 10 percent in the first nine months of 2017, led by sharp declines in trading fixed income and currencies. While cost-cutting limited the damage to the bottom line, boss John Cryan’s turnaround strategy depends on a recovering top line.
AB InBev grows bigger without getting better 26 Oct 2017 A year after acquiring SABMiller, the world’s No.1 brewer said cost savings from the deal will be higher than expected. Bulking up allows the Belgian company to buy on better terms. Yet it looks worryingly weak at persuading consumers to drink more of its beer.
Santander runs a tight ship into looming storms 26 Oct 2017 The Spanish bank grew revenue in the first nine months of the year and kept a lid on costs. The lender is fast integrating Banco Popular and easily covering its cost of capital. Just as well since hazards, like a Brexit-driven UK recession, will test its efficient balance sheet.
Nokia joins Ericsson in Nordic doldrums 26 Oct 2017 The Finnish telecoms-kit maker’s shares slumped 15 pct after poor third-quarter results. They are trading at a discount to Ericsson’s stock despite improving margins. A warning on weak demand for its mobile-networks products shows tough market conditions trump good management.
Western oil drillers flirt with OPEC-style dilemma 25 Oct 2017 U.S.-focused producers may be targeting higher returns over pumping more crude. Majors like Exxon and Chevron know the trade-off, too. Selling less oil at a higher price is appealing if everyone joins in. But the cartel’s internal tensions show how easily self-interest prevails.
Carlyle puts socialism at the heart of capitalism 25 Oct 2017 Like China’s ruling party, the buyout firm has pulled off a leadership reshuffle, with new roles for David Rubenstein and his co-founders. Both Carlyle and China will share duties among a collective of powerful men. But at least in the Middle Kingdom it’s clear who’s in charge.
Deutsche Bank’s next problem may be excess capital 25 Oct 2017 The German lender wants to float a 25 pct stake in its asset management arm next year. An IPO could raise around 2.2 bln euros, Breakingviews calculates. Deutsche would dilute its exposure to its best business – but would once again be able to give shareholders a dividend.
Lloyds capital gusher suffers regulatory blockage 25 Oct 2017 Robust third-quarter earnings should enable Britain’s largest retail bank to pay a hefty dividend. But increased capital requirements have raised doubts about how much it can distribute. That, along with the sluggish UK economy, puts a question mark over the lender’s valuation.
Italy takes baby step forward in bank bail-ins 25 Oct 2017 Banca Monte dei Paschi di Siena shares resumed trading after a 4 bln euro bailout. Institutional bondholders forced to take stock face a 40 pct hit. Small investors will lose less thanks to a special deal. At least they will share some of the cost to taxpayers of saving the bank.
Activist broadcasts Japanese governance weak spot 25 Oct 2017 A UK investor wants TBS to sell corporate stakes and return cash to shareholders. Fair enough: The $3.5 bln TV network owner has little obvious use for Tokyo Electron and other holdings. Despite some broader progress, it will take more pressure to break this bad Japan Inc habit.
Flat soda makers will run out of revenue refills 24 Oct 2017 Coca-Cola bought niche mineral-water company Topo Chico to boost revenue. Chicago’s recent removal of a short-lived soda tax offers relief. But rival PepsiCo reported a fall in U.S. beverage sales in the third quarter. The bright spots are drops in Big Soda’s ocean of challenges.
Time for Kering to hang up its boots at Puma 24 Oct 2017 The sneaker maker has been a poor investment for the fashion group and sullies its luxury image. Puma’s recovery could let Kering get out without a loss, even if finding buyers looks tricky. Spinning off the 5 billion-euro unit would be easier, and leave less cash to squander.
India bites bullet with $32 bln bank bailout 24 Oct 2017 New Delhi is finally tackling state lenders’ bad debts. Clever financing through “recap bonds” should reduce the strain on the public purse and soak up banks’ idle cash. The final amount may need to be higher, but the recapitalisation should help revive India's flagging economy.
Whirlpool and Sears engage in war of weaklings 24 Oct 2017 The appliance maker will no longer supply the retailer with most of its brands after a price-hike request was denied. Whirlpool cited higher costs and growing competition. Sears is struggling to keep its business alive and out of bankruptcy. Neither has the upper hand.