Month: October 2017

Animal-health spinoff may be just the Rx for Lilly

24 Oct 2017

The $90 bln outfit is weighing the sale or float of its pet and livestock drug business. Lofty valuations make it tempting to raise cash when the firm’s core pharma business has pipeline stumbles. But FDA approval for its arthritis treatment is the real prescription investors seek.

Republican tax-reform hopes have yet to hit reality

24 Oct 2017

A giddy GOP looks set to pass a budget resolution to pave the way for a tax overhaul that the House aims to approve by Thanksgiving. Members haven’t solved their deficit dilemma, though, and President Trump has shot down potential revenue raisers. The hard work is just beginning.

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.

GM in fighting shape for autonomous tech battle

24 Oct 2017

Production cuts and surging post-hurricane vehicle sales are helping the $66 bln automaker right-size its U.S. business. The big test is yet to come, though. To sustain a surging stock price, CEO Mary Barra needs to deliver on ambitious goals for self-driving and electric cars.

Beefed up sales keep McDonald’s afloat

24 Oct 2017

Flouting food trends has paid off for CEO Steve Easterbrook. Serving core customers the classics delivered same-store sales growth, in spite of Hurricanes Harvey and Irma. The broader industry, which expects a 2.2 pct decline in comparable sales, will feel the bad weather.

Fiat Chrysler looks boxed in by M&A options

24 Oct 2017

Sergio Marchionne's revamp is picking up speed. But the carmaker is still worth little more than half the 40 bln euros at which the Agnelli family might consider a sale. That figure is beyond Chinese suitor Great Wall and a stretch for global peers. Fiat may be stuck where it is.

Infosys new-old saviour fails to make a splash

24 Oct 2017

Founder and returning Chairman Nandan Nilekani is throwing away revenue growth goals for India’s IT services group. He’s also putting past controversies over M&A and pay to rest. But details on a new strategy are light, a CEO search continues, and the board still needs a revamp.

UniCredit gets head start on recovery path

24 Oct 2017

A data glitch forced Italy’s biggest bank by assets to publish third-quarter results two weeks ahead of schedule. Fortunately, the figures show lower costs and stronger capital. A fee-boosting partnership with asset manager Amundi helped offset the drag from low interest rates.

Novartis gets brief respite from problem children

24 Oct 2017

The Swiss drugmaker’s troubled eyecare unit performed better in the third quarter, reducing pressure for a quick sale. Its generic business still faces challenges despite beating forecasts. The group’s devotion to its stake in rival Roche, however, remains hard to justify.

Arqiva’s old-school TV vibe creates IPO static

24 Oct 2017

The UK broadcast and mobile masts company plans to raise 1.5 bln stg. An order book of mostly inflation-proofed long-term contracts and the pledge of big dividends are appealing. Less so is its reliance on TV towers rather than the cell ones that are tomorrow’s money spinners.

Indian lender becoming world’s biggest little bank

24 Oct 2017

HDFC Bank shares have soared 50 pct this year amid strong income gains. A market cap near $90 bln puts it ahead of many global peers despite a balance sheet that pales by comparison. The plight of India state lenders makes a valuation of four times book less scary than it seems.

Cox: Aramco clouds Saudi’s coming-out party

24 Oct 2017

The kingdom’s crown prince is hosting a mini-Davos this week to showcase Riyadh's charms as a financial center. From Masayoshi Son to Steve Mnuchin, participants may mostly avoid questions about one of his key goals: the touted but uncertain market debut of oil giant Aramco.

Tencent’s books are less gripping than its games

24 Oct 2017

Publishing unit China Literature wants to list in Hong Kong at a value of up to $6.4 bln. Sales and earnings are taking off. But e-books are less lucrative than online games, with a smaller market and a shorter track record. This does not merit a valuation to match its parent.

AT&T’s debt burden will force stark choices

23 Oct 2017

Buying Time Warner will leave the telecom giant about $180 bln in hock. Cash flow from the HBO parent will help, but it needs to spend heavily on content and wireless technology. CEO Randall Stephenson may have to offload assets if he wants to maintain a big dividend.

Stitch Fix IPO fits better than Blue Apron

23 Oct 2017

The personal-clothing shopping service faces tough competition. Yet unlike the meal-delivery service whose public offering flopped in June, it has largely financed rapid growth through profit. Success depends on its shoppers and algorithms continuing to nail fickle fashion.

Cisco buys more growth, but at unclear value

23 Oct 2017

The $170 bln networking giant’s $1.9 bln deal for collaboration-software outfit BroadSoft will help offset shrinking sales. The price, a 28 pct premium, looks rational. Cisco didn’t elaborate on synergies, though. Like its 200-plus other purchases, success will be tough to track.

Arconic’s boardroom peace comes just in time

23 Oct 2017

The car and aircraft-parts maker resolved its management struggle with activist Elliott Management by tapping GE’s Charles Blankenship as CEO. A fresh earnings miss means he’ll need to hit the ground running. Troubles in a key new engine program are slowing progress on margins.

GE has become the ultimate industrial lightweight

23 Oct 2017

Earnings that even new CEO John Flannery called “horrible” put fresh pressure on a stock down over 25 pct this year. The last surviving original Dow member now has by far the lowest weighting of any share in the index. It’s an embarrassing sign of the storied firm’s troubles.

To restructure European banks, break the M&A taboo

23 Oct 2017

Cross-border deals are back on the agenda in Europe, while an activist is agitating to break up Credit Suisse. Investment bank mergers have a terrible track record. But combining Europe’s struggling wholesale lenders is the only way to boost scale and improve returns.

Russia power IPO lacks “pass the parcel” discount

23 Oct 2017

Oleg Deripaska’s En+ priced its London IPO with a valuation of up to $8.5 bln. On the surface that makes it a cheap way of buying Rusal, the Hong Kong-listed aluminium producer it controls. The catch is that investors can’t see how this portfolio rejigging will shake out.

Italy’s north teaches Catalonia a self-rule lesson

23 Oct 2017

Areas which bring in 30 pct of Italian GDP demanded more autonomy in a referendum. Lombardy and Veneto want to keep more tax revenue. But unlike the Spanish region they stopped short of demanding independence. Orderly voting and a clear outcome will force Rome to negotiate.

Mediclinic takes advantage of sickly Spire

23 Oct 2017

The operator of hospitals in South Africa and the Gulf has bid 1.2 bln pounds in cash and shares for its UK peer. Spire Healthcare has been hit by a scandal, government cuts, and an executive vacuum. Mediclinic is offering a stingy premium and too much of its unappealing stock.

China’s mouldy cheese ban leaves lingering stink

23 Oct 2017

Authorities have called off a blockage on imports of Brie, Roquefort and the like. Food safety fears threaten China’s growing appetite for dairy and other foreign fare. The risk of such reactions from a maturing market will require investors to have a strong stomach.

Noble’s bid for survival takes humbling turn

23 Oct 2017

The stricken commodities trader is offloading oil-liquids, one of the better bits of its shrinking business. A long list of terms, however, suggests buyer Vitol capitalized on the distress. Efforts to raise $1 bln more to pay off debt amid a big loss could face similar hurdles.

Masayoshi Son becoming one-man bubble-maker

23 Oct 2017

His sprawling SoftBank may be eyeing a second Vision Fund twice the size of its first yet-unspent $100 billion one. The extraordinary sums are bound to inflate already-frothy tech valuations. Excess capital combined with outsized ambition tends to have a predictable outcome.

Abe wins mandate to give Japan a raise

23 Oct 2017

Shinzo Abe’s big election win gives him room to push harder on reforms to boost wages and competitiveness. But skeptics have seen this before. The prime minister must act quickly and avoid getting sidetracked. After nearly five years of delay, investors are losing faith.

Tesla could hit second gear with Shanghai factory

22 Oct 2017

Elon Musk may soon be able to build his electric cars in China. That's essential for catching up or keeping pace with rivals in the fast-growing market. It'll also take pressure off production trouble in the United States. A troubling tariff problem, however, is apt to remain.