Year: 2009

Hubris stalks Marchionne, Fiat’s star manager

16 Apr 2009

Fiat s boss has done a great job at the Italian carmaker. But he seems to want more. His latest suggestion: one man could run both Chrysler and Fiat. That sounds like too much for any manager. Marchionne may be the best around, but that doesn t qualify him for impossible tasks.

Pound’s rally lacks recovery legs

16 Apr 2009

Hopes of global recovery have favoured the UK currency. But the market is overlooking the country s fundamental weakness. In the currency race, sterling may be able to pull ahead of the flagging euro but may continue to struggle against the dollar.

India election result critical to investor confidence

16 Apr 2009

The world s secondfastest growing economy is going to the polls relatively unscathed from the financial crisis. But India still needs to restore its appeal to both foreign and domestic investors. The wrong election result could be a huge setback.

How Deutsche Bank quietly raised E25bn

16 Apr 2009

It s the only major bank to avoid tapping either the state or private investors for a big slug of capital. To keep coffers replenished, Deutsche has instead pulled a wide variety of levers. It may need more if it is to retain its unique crisis distinction, says Jeffrey Goldfarb.

Google is human after all – just barely

16 Apr 2009

The search giant s revenues fell last quarter for the first time in its short history. It seems advertising woes are denting its moneyspinning internet business. Still, compared to its brethren, Google looks wellpositioned to weather the downturn by increasing its dominance.

China’s medicine works – with side-effects

16 Apr 2009

First quarter GDP growth of 6.1% was low by Chinese standards, but the economy seems to be responding to Beijing s $585bn stimulus programme. The money isn t just pushing up investment and consumption. Stock and property markets are looking preternaturally lively.

UBS’s 8,700 job cuts provide reality check

15 Apr 2009

Goldman Sachs strong results triggered market euphoria, but UBS is in full crisis mode: 11% of the Swiss bank's workforce is going amid fresh losses and client outflows. Headcount is going back to 2004 levels. UBS may be a better indicator than Goldman of the industry s future.

Tiscali may not make it alone

15 Apr 2009

The auditors for the debtmired Italian broadband provider won t sign off the 2008 accounts. Ernst & Young doubts whether this is a going concern. The lenders are lukewarm about refinancing, so Tiscali may have to turn to spurned suitors BSkyB and Carphone Warehouse.

More bank job losses on tap – but drip, drip

15 Apr 2009

The shrinkage in investment banking isn t over. More layoffs from recent bank mergers are due. Some firms remain in retreat. But for others, the desire to seize market share will dampen their appetite for much more firing. A few may even have overdone it.

Do US stress tests render PPIP pointless?

15 Apr 2009

Both aim to restore confidence in the financial sector. But if the US proclaims its stress tests prove the 19 largest banks are healthy, it removes much of the logic for allowing vulture funds to use taxpayerfunded leverage to feast themselves on bank assets at firesale prices.

Pirates’ geopolitical arbitrage game is changing

15 Apr 2009

On one side is a failed state. On the other are countries that can t afford to protect all their shipping. It s an opportunity for ruthless rent seekers to step in. But when these toll collectors get too greedy, the equation changes. Clinton wants that to happen off Somalia.

Personal view: Amazon’s Kindle is understated thriller

15 Apr 2009

The electronic book reader may not quite have the iPod s wow factor. But it does open up myriad options in a similar way. Aside from books, you can get newspapers on it in real time. It lets you carry around reference works. It can even read to you. Richard Beales is hooked.

Spain’s banks wrestle with post-bubble housing

15 Apr 2009

Banks have been buying property from ailing developers, in the hope of later gains. The strategy worked in the last bust, but the wait this time could be painfully long. Discount lending might clear some housing stock. But there s only so much a bank can do in a falling market.

Markets over-stimulated by government money flood

14 Apr 2009

What s pushing share prices up and credit spreads down? Part of the answer is renewed investor confidence. But the flood of free money from governments is probably the greater force. And that money flow may not work as well in the complex real economy as in the financial markets.

Arbs aren’t buying PCCW’s buyout plan

14 Apr 2009

It looks like a juicy profit. The Hong Kong telecom is trading for 10% less than shareholders agreed to take from tycoon Richard Li. But the deal was made in better times. So Li might not mind if regulators shoot it down. He might even be looking for a semidignified way out.

Who would want to run Fannie and Freddie?

14 Apr 2009

Talk about a thankless job. There s low pay, regulatory and legislative meddling and little scope for reform due to the focus on public policy goals. Neither US mortgage giant can currently survive as a private entity; their new bosses could be little more than custodians.

US backing can’t dispel Citi credit concerns

14 Apr 2009

You d think government support of the megabank including $45bn of taxpayer equity and a partial asset guarantee would ease creditor concerns. But default protection costs twice as much for Citi as it does for BofA. Despite assurances, bondholders are bracing for pain.

BT needs back-to-basics strategy

14 Apr 2009

The UK telco is set to post ugly annual results this week, including a soaring pension deficit. New CEO Ian Livingston needs to stop the rot. A likely dividend cut should be just the start. BT needs a strategic makeover, focusing on its UK broadband infrastructure business.

PE and hedgie fundraising in Cuomo’s crosshairs

14 Apr 2009

Carlyle has become embroiled in the New York attorney general's investigation of allegedly corrupt investment decisions made by the state's pension fund. The probe shines a light on the use of placement agents, a common but sometimes questionable practice in fundraising.

Americans learn to buy less and save more

14 Apr 2009

The 1.1% drop in March retail sales showed US consumers are filling their piggybanks. The savings rate was 4.2% in February; it should rise further in March and April when stimulus tax cuts kick in. Some economic imbalances are disappearing at last. Pity about the new ones.

Skype IPO should be appetiser for Ebay breakup

14 Apr 2009

The online auctioneer plans to float the profitable internet calling service in 2010. That s good news for shareholders. The fit was awkward, and Skype could fetch $2bn handy cash for Ebay s struggling auction unit. But to really help the shares, Ebay should unleash Paypal too.

Ebay should swallow bitter pill of Skype sale

13 Apr 2009

The internet calling service s founders are hatching a plan to buy it back from the online auctioneer for less than they sold it for. That may seem less than tempting for Ebay. But Skype ties up capital and distracts the company s management. Ebay should sell it now.

US drugs deal shows benefit of going horizontal

13 Apr 2009

Express Scripts lost out to CVS in the battle for Caremark. But two years down the road the drugs benefits group's avoidance of vertical integration has been rewarded by better performance, crowned with a $4.7bn deal to acquire WellPoint s benefits business.

Goldman lays out flashy wares for $5bn stock sale

13 Apr 2009

The Wall Street firm made $1.8bn, grew its balance sheet and is paying staff more than last year, despite principal investment losses and lowly investment banking and hedge fund results. Goldman seems intent on proving the investment bank model is alive and kicking.

Only elections can halt Thai economy’s plunge

13 Apr 2009

Prime Minister Abhisit was installed by demonstrations that ousted his predecessor. He has now used violence to face down counterdemonstrations, but his government still lacks the legitimacy essential for economic growth. Fresh and honest elections are the only way forward

Goldman hopes second time’s the charm

13 Apr 2009

The bank has a new $5.5bn fund to buy stakes in private equity funds from investors, its second such fund in two years. Now, stakes are available at big discounts. That's good for Goldman's new fund, if not for its own buyout investments. But prices still may not be low enough.

LBOs are back – if you buy from a bank

9 Apr 2009

A deal funded 71% with debt 7.5 times ebitda sounds like a throwback to Steve Schwarzman s 60th birthday. But that s the financing Barclays is offering with its sale of iShares. Fifth Third did something similar for Advent. LBOs are OK again when the lender is the seller.

Schaeffler restructuring tests Germany’s nerve

9 Apr 2009

The government has dangled the idea of helping the struggling familyowned manufacturer. But the problem is simple: Schaeffler has too much debt following its E12bn takeover of Continental. That's an issue for Schaeffler and its banks. The state should let them take the pain.

US trade imbalance now the least of its problems

9 Apr 2009

February s figures show the perennial US payments deficit has halved. However overall imbalances have worsened the budget deficit is larger than the trade one ever was. With GDP falling and consumption only modestly down, that puts huge pressure on investment.

Private-equity investors are in the driving seat

9 Apr 2009

Buyout firms fundraising collapsed in the first quarter. Yet a record number of privateequity shops are after new money. This suggests competition for investors is fierce. Lauren Silva Laughlin says they should take the opportunity to push for lower fees and better governance.