UK retail property values look ever more exposed 9 Dec 2014 Another profit warning from Tesco has drawn attention to Britons’ changing shopping habits. In grocery, it’s all about discounts, online and convenience. That calls into question the big retailers’ property valuations – especially those with super-large stores.
Citi boss etches a dangerous line 9 Dec 2014 The mega-bank is taking a surprise $3.5 bln charge mainly for Libor, forex and money laundering legal costs. CEO Michael Corbat says it should mostly put the issues to bed. That’s a bold call, especially given Citi’s approach to reserves. The words may yet come back to haunt him.
Abercrombie CEO joins Society of Ignoble Chairmen 9 Dec 2014 Michael Jeffries is leaving the once hot apparel chain not even a year after the board stripped him of the dual leadership role. While his departure may help Abercrombie & Fitch, it’s the latest instance of good corporate governance being sadly used to punish wayward management.
Tesco troubles are deep and long-lasting 9 Dec 2014 The UK grocer has cut profit guidance again, this time by a quarter, sending the shares to a new low. Tesco’s competitive weakness means more bad news could come. To keep investors on board, Tesco needs a chairman, a strategy and a strong balance sheet more than ever.
Morgan Stanley boss may get biggest deferral bonus 8 Dec 2014 The investment bank will pay dealmakers more up front, reversing a plan that saved money in leaner times not long ago. Ditching a failed bid to change industry norms will cost $1.2 bln. Cutting future expenses, though, should help boss James Gorman reach his return target quicker.
United Tech shows way for other company boards 8 Dec 2014 The U.S. defense firm’s directors unexpectedly ousted the chairman-CEO after deciding his mind wasn’t fully on the job. They had a strong in-house replacement at hand, ensuring that investors barely blinked. Even boards with separate chairmen aren’t usually so on the ball.
Merck bets $8.4 bln on more profitable antibiotics 8 Dec 2014 For years, big pharma has left new work on bug control to small biotechs. But the mood is changing. Rising – and alarming – resistance to existing drugs and government incentives to develop new ones are injecting allure into companies like Cubist, Merck’s target.
Springer holders to trade lesser power for growth 8 Dec 2014 The controlling family of Germany’s largest publisher will tighten its grip over the company by changing its governance, after a deal with private equity group General Atlantic. Axel Springer will become takeover-proof. At least it will be able to grow by using its own shares.
Uber flips the bird at critics with convertible 5 Dec 2014 The taxi app’s valuation soared to $40 bln in its latest funding round. But a plan to issue securities that convert to stock at a discount to an IPO shows how firmly Travis Kalanick remains in the driver’s seat. Uber can raise money at a potentially massive premium.
GM plant closure flags Europe’s wider car crash 5 Dec 2014 Bochum represents Germany’s first shutdown since World War Two. That shows how slow the industry has been to close European factories, despite slumping sales. Many are operating way below capacity and firms are offloading vehicles at a discount. That will keep profits low.
Pharma’s dying assets lack M&A remedy 5 Dec 2014 Both GlaxoSmithKline and Sanofi have scrapped sales of mature drugs. The motives differ, but both flops highlight the challenge of finding suitable owners for such assets. Other industries would spawn rollup vehicles. Here, buyers lack expertise, and sellers aren’t desperate yet.
Bankia renaissance hit by sins of the past 5 Dec 2014 A high court report suggests the Spanish bank’s accounts for its 2011 IPO contained errors, and criticises current as well as past management. Bankia’s top brass should survive. The risk is that compensation has to be paid, hitting a 2015 resumption of the dividend.
Cramer’s mad money: fair game for fellow blowhard 4 Dec 2014 Acerbic activist Carlo Cannell wants the CNBC stockpicker and founder of TheStreet to sell his company or take a big pay cut and quit TV. Selling the online tipsheet firm may be wishful thinking. But Cramer’s take, at 14 pct of revenue, is as crazy as the name of his cable show.
China stocks take turn on monetary merry-go-round 4 Dec 2014 Share prices have soared, and turnover has hit records in Shanghai and Shenzhen. Corporate profits and inflows from Hong Kong don’t explain it. What does is the frantic search for returns as house prices and savings rates fall. Stocks are just a different way to speculate.
WH Group looks stuck in a value trough 4 Dec 2014 Shares in the Chinese-American pork producer have fallen 31 pct since its August IPO. Unusual moves by its chairman and a private equity backer are partly to blame. Though the stock now looks cheap, some long-term investors will soon be free to sell. Any recovery seems far off.
Amazon debt implies minor degrees of easy money 3 Dec 2014 The online retailer’s refusal to specify why it wanted to borrow $6 bln and a slim interest cover of 1.2 times required it to work harder than most to lure buyers. Medtronic’s record issue and Alibaba’s debut got away easier. Investors can hardly be called discriminating.
UK "Google tax" needs other countries to play ball 3 Dec 2014 The new 25 pct levy on profits that multinationals divert from Britain will raise just 1 bln stg. But it might encourage companies to declare UK profits and pay the headline 21 pct rate. It might not, if the rules are sloppy or other jurisdictions don’t cooperate.
Equity market could be next to drop after oil 3 Dec 2014 The huge fall in the oil price will be good for global growth, helping consumers and importing countries. That might seem to justify high equity valuations. But the growth boost will take time and speculative excesses are evident in stocks.
Richemont and Net-a-Porter are better as separates 3 Dec 2014 The Swiss luxury group is reportedly mulling a sale or IPO of its online subsidiary. That makes sense. The e-retailer fits awkwardly in the Cartier owner’s portfolio. A more tech savvy owner would suit Net and let Richemont focus on the high-margin luxury business it knows best.
BNY Mellon learns activist lesson from its rival 2 Dec 2014 The $45 bln bank founded by Alexander Hamilton has given Nelson Peltz’s firm a board seat. State Street outperformed after the billionaire investor challenged management in 2011. Making his Trian partner a director spares BNY Mellon a proxy fight and could lead to similar gains.