Year: 2006

Nasdaq inches ahead in race for LSE

3 May 2006

The US exchange has increased its stake in the LSE to almost 19%, while Euronext says it s no longer discussing an offer for the UK group. But Nasdaq isn't yet home and dry. And it somehow needs to persuade the LSE to come to the negotiating table.

Warner rejects £2.3bn EMI bid

3 May 2006

The problem for the UK music group is that it doesn t have much room for manoeuvre. If EMI sweetens the terms much further, it runs the risk of paying away all the value to Warner shareholders.

Microsoft should merge MSN with Yahoo

3 May 2006

A better solution would be to put all of Microsoft s internet operation into Yahoo. The software giant mulled taking a stake in the internet group. Shareholders are worried that Microsoft will blow a fortune fighting Google.

Resolution chases another audacious deal

3 May 2006

The insurance group only recently failed to buy Standard Life. Now it is trying to buy another larger entity Abbey s life business. Why is it being so aggressive? Simple. Its mission is to roll up unwanted UK life businesses. To do that it needs to stay ahead of rivals.

VW boss’s job extension comes at a price

3 May 2006

Pischetsrieder will stay in the driver s seat until 2012. That s good news. It ends months of fights, and management can return to business. The bad news is that he made further concessions to the unions over job cuts. The 2008 performance targets look increasingly out of reach.

BAA delivers flimsy defence plan

3 May 2006

The UK airports operator rightly believes Ferrovial s current bid doesn t deserve a stronger defence plan. But BAA can t afford to sit on its hands. Sooner or later it may well have to beef up its defences.

New French poison pills are unwarranted

3 May 2006

Bouygues has already got authorisation to issue warrants in the face of hostile bids. Suez and Saint Gobain are set to follow. It s a feeble gesture in the wrong direction. Thankfully, big names such as Total and Societe Generale are staying away.

Ethanol boom leads to drunken speculation

2 May 2006

High oil prices and US clean air regulations have temporally made distilling corn into fuel more profitable than refining gasoline. And there s a better longterm story turning agricultural waste into ethanol. But investors are combining and confusing the two stories.

Morgan Stanley’s Roach leaves bear’s lair

2 May 2006

Whereas Roach foresees an end to global imbalances, the remaining bears grumble about the global bubble. The bank's chief economist has become more optimistic about the global economy.

EMI shouldn’t pay much more for Warner

2 May 2006

The US music group s shares are up 38% over three months in anticipation of a takeover from its UK rival. While there is commercial logic in a deal, tilting the terms further in Warner s favour would stop EMI keeping any of the value.

Emerging-market mobile assets go through the roof

2 May 2006

Investcom, an African operator, has just sold for $1100 per user. That's over twice what Turkey's Telsim sold for in December. Cashrich Middle Eastern buyers seem to be driving rocketing valuations. Meanwhile established European groups are being sidelined.

Aramark MBO fraught with potential conflicts

2 May 2006

The CEO and his mates control almost half the votes. while the caterer s 2001 underwriters Goldman and Morgan are financing the $5.8bn deal. These are manageable conflicts, but only if the special committee of directors does a good job. This isn't always the case.

Austrians bail out Bawag

2 May 2006

It was the attempted coverup that brought on the liquidity crisis. Ironically, it was not the huge losses it made on derivatives trades that nearly sunk Austria s fourth largest bank.

Bolivian nationalisation adds to pressure on oil prices

2 May 2006

But history suggests their own economies will suffer the most. Longerterm, weaker supply is likely to lead to even higher oil prices. High oil prices are tempting populist leaders such as Bolivia s Morales and Venezuela s Chavez to sieze control of their energy industries.

Dollar could be slipping from Fed grasp

2 May 2006

Bernanke says he doesn t want to sound too dovish. That refinement of the Fed chairman s view stopped the dollar s fall for a few hours. But the lure of higher US rates may be losing its power. Oil exporters, who are not dollarfriendly, have become the crucial US creditors.

Oil investors should beware of the super contango

2 May 2006

Rising crude prices and a flood of speculative money has ensured that the oil show has played to packed audiences. A steepening of the oil market s current contango into a super contango could see investors suddenly rushing for the door.

Credit Suisse’s investment bank bounces back

2 May 2006

The former CSFB flew in Q1. Revenue growth outshone US peers without the soaring costs which marred last year s results. That will go some way to rewarding dogged investors. But the division needs to show stamina and speed to help close the group s discount.

Money, not, morals behind cut in world’s biggest IPO

1 May 2006

It isn t just unease about Russian corporate governance that has pushed Rosneft to halve to about $10bn its planned stock market listing. Rosneft no longer needs to raise so much cash, thanks to high oil prices. That s just as well as investors will demand a big discount.

Galbraith’s lasting contribution: the bezzle

1 May 2006

The Harvard economist supported many lost causes, such as price controls and big government, during his life, which ended Saturday. His caustic commentary on Wall Street and analysis of speculative manias, however, deserve to be remembered.

Man’s new fund makes eye-popping fees

30 Apr 2006

The UK listed hedge fund group is getting a remarkable 5% management fee on its recent record $2.3bn retail fund launch. If all goes to plan, Man s fees over the life of the fund will be worth about $1.6bn an astonishing 70% of what investors are putting in.

Four-play finally makes economic sense

30 Apr 2006

While telecom and cable companies past offerings of bundled services never amounted to much, this wave looks sustainable. Previous waves were driven by the marketing idea of hitting consumers with one large bill. Technological progress now means one small bill.

Mack should start Morgan Stanley breakup

28 Apr 2006

He can t completely dismantle the conglomerate, although that should be the goal to get the stock moving. Some businesses still need fixing. But he can jettison Discover. That at least would give the lie to the notion he s reluctant to break up because it would make him look bad.

Santander starts to whip Abbey into shape

28 Apr 2006

The Spanish bank had a storming Q1. Even Abbey, its UK acquisition, is beginning to bring home the bacon. That should provide some comfort to investors concerned that Santander will be tripped up by its appetite for deals.

Blackstone DT deal only makes sense with mega leverage

28 Apr 2006

The buyout firm s partners are expecting returns of around 30%. But they won t get that from the slowgrowing telecoms giant, unless Blackstone piles on the debt.

Microsoft better off without MSN

28 Apr 2006

Stuffed inside the conglomerate, MSN has made little headway against more focused rivals like Google despite massive investment. Until MSN is set free or sold to Yahoo it will divert cashflows to investors and never live up to its potential.

Yell goes for growth with E3.3bn TPI acquisition

28 Apr 2006

The Spanish directories business adds an extra leg to Yell s US and UK operations. But Yell is paying a rich price for that Spanish and Latin American growth.

Will carbon trading go up in smoke?

28 Apr 2006

It s a fair question after the price of emission permits fell by 50% in three days. It turns out Europeans aren t as gassy as expected. Some hedge funds are smarting, and some utilities might look less valuable. But the market serves a real need. It shouldn t disappear.

Wal-Mart bank critics guilty of hypocrisy

28 Apr 2006

Among the forces aligning against the retailer are community banks, who say WalMart would destroy American capitalism. But this assumes that small banks dole out credit better than big ones do. That s not what the numbers universally suggest.

Echoes of dot-com era heard in emerging markets

28 Apr 2006

One day Dmytro Firtash is afraid to disclose his ownership of a lucrative gas trading company. The next he s planning a London IPO. It s a rapid change. But he has little to fear from London investors. Enthused for Russian stocks, they are failing to ask tough questions.

VW’s E1bn provision adds to mystery

28 Apr 2006

Not only is its boss s future in the dark, but VW also made E1bn in provisions without saying why. Losses in the US are also a mystery. No wonder investors are getting nervous. Unless VW provides a good explanation, its share price deserves to head south.