Jamie Dimon, 10 years on, is hard bank CEO to beat 30 Dec 2015 Looking back on a decade running JPMorgan, the boss has had missteps like the London Whale, big legal fines and clashes with regulators. Yet Dimon has fashioned a bank with leading market share, top-tier returns and a head start in fintech. It’s well placed for the next 10 years.
Portugal finds bad solution for BES good bank 30 Dec 2015 Lisbon has recapitalised lender Novo Banco by moving bonds back to failed Banco Espirito Santo, from which it was carved out. The move clears the way for Novo’s privatisation, but highlights the unpredictability of bank resolutions, and does nothing for Portugal’s investibility.
Luxury groups could shrink their way to riches 30 Dec 2015 Labels like Prada and LVMH have spent a decade expanding like crazy to meet emerging market demand. Burberry has tripled its store base. It’s time to go the other way. While cutting back will be painful, it could spur higher luxury valuations. Hermes is one that has it right.
Worst CEO job in America for 2016? P&G 29 Dec 2015 David Taylor will struggle to make his mark on the lumbering $200 bln giant. His predecessor-turned-Chairman A.G. Lafley already axed weaker brands, leaving Taylor to sort out growth. He may be forced to break up the Tide-to-Pampers icon or spend the year fighting calls to do so.
Freeport chairman exit eases credibility problem 28 Dec 2015 James “Jim Bob” Moffett is leaving the $9 bln mining group he helped found amid pressure from activist investor Carl Icahn. It’s a needed step to restore confidence after faux pas including an ill-timed, cozy-looking 2012 oil deal. His replacement, though, has his work cut out.
Valeant’s latest fix reinforces its challenges 28 Dec 2015 The $38 bln drug company is handing the reins to three execs while CEO Mike Pearson is on medical leave. And three directors will “oversee and support” them. The double triumvirate shows how reliant on one man Valeant now is as debt, R&D and strategy issues take center stage.
Balance sheets will get more unbalanced in 2016 28 Dec 2015 The lesson that too much debt is dangerous has sunk in, again. Amid volatile prices and currencies, dwindling cashflows can quickly make healthy firms turn sick. Miners, Brazil and buyback junkies are among those facing a reckoning. Cash-rich acquirers may have a field day.
BNP concedes on capital with U.S. bank rethink 24 Dec 2015 France’s largest bank by assets may sell its Hawaiian arm to boost its lowly 10.7 pct common equity ratio. Nixing the dividend for a year would have about the same effect. But that would be a bigger indignity for BNP Paribas, a serial acquirer playing catch-up on capital.
Capital drought will spark unicorn M&A orgy 23 Dec 2015 Plentiful money has detached valuations on many hot private tech firms from reality. About a third of the 144 private startups worth at least $1 bln are valued at precisely that much. As capital dries up, selling to bigger rivals or mating with other unicorns becomes appealing.
Breakdown: U.S. song rights could use some harmony 23 Dec 2015 An obscure board has upped fees online radio’s Pandora pays performers for music. Satellite rivals owe less, and terrestrial stations nothing. Separate rates cover composers, and stars like the Beatles – now on Spotify – set their price. Lesser lights get lost in the cacophony.
Banks’ low UK tax bill hands ammo to EU exit camp 23 Dec 2015 Seven big investment banks paid just $31 mln of UK corporation tax on profit of $5.3 bln in 2014, Reuters has found. Historic losses reduced the bills, and taxes paid by employees remain chunky. But the revelations will help those agitating for Britain to quit the European Union.
Netflix will be recast from ally to villain 22 Dec 2015 Once derided as the “Albanian army” by Time Warner boss Jeff Bewkes, the video-streaming service is now valued at about the same $55 bln as his company. With some 69 mln subscribers globally, it may be too late for media bosses to do anything about this beast they helped create.
Star Wars awakens new hope for Disney returns 21 Dec 2015 The latest adventure from a galaxy far, far away raked in a record $238 mln in North America and $517 mln overall on its opening weekend. Based on returns for other movies, the power of the Force could make Lucasfilm worth almost $20 bln - five times what Disney paid.
Theranos’ wounded credibility hobbles all unicorns 21 Dec 2015 The blood-analysis company faces new charges of finagling with its herpes test, a product essential to its success. Unless the firm wins vindication from independent experts, the damage may be too serious to fix. That harms similar startups, whose survival depends on trust.
Portugal pays high price for past banking sins 21 Dec 2015 Its taxpayers will stump up 3 bln euros, or 1.7 pct of GDP, to wind down troubled lender Banif. The move follows a flawed 2013 rescue. The new plan resolves the issue. But it also shows Portugal’s economic weakness and the difficulty of making creditors pay for bank failures.
Even Facebook can’t make distance disappear 18 Dec 2015 The social network is virtual, but in the real world it’s paying staff $10,000 to live near its campus. Silicon Valley draws strength from bringing smart people together to cross-pollinate ideas. A downside is having to keep pace with rising real estate costs and commuting times.
Short-seller attack on Casino ultimately healthy 18 Dec 2015 A withering critique of the French retailer’s book-keeping by a short-seller sent shares down by almost a fifth. Casino is riled. Muddy Waters’ approach raises ethical questions. But one way to see this conflict is as a beneficial kind of pessimism-tinged activism.
Top trades of 2016: Clinton, Mayer, Isis and Uber 18 Dec 2015 A survey of Breakingviews readers suggests that a year from now, the U.S. will have its first female president and Yahoo’s CEO may be free to give her a hand. Uber’s valuation will stall, as worries about Islamic State accelerate. In other news, Twitter hasn’t made us any happier.
Global corporate profit is under serious threat 17 Dec 2015 U.S. companies are earning close to the most in five decades as measured against national income. It’s a worldwide trend, with bottom lines far larger as a share of GDP than in 1980. Competition, disruption and tax policy – along with weaker growth – are set to change all that.
Safe havens scarce in brewing high-yield storm 17 Dec 2015 Junk bond investors were battered by problems in energy, commodities and the collapse of a Third Avenue fund in 2015. Losses are likely to spread as the Fed raises rates and risk-averse investors rein in lending. Bets that Europe will be able to provide shelter look wrong-headed.