Americas

Nasdaq howler can’t explain Facebook flop for long

21 May 2012

The exchange is still clearing up after a systems snafu left the social network’s stock trading in the dark after its Friday IPO. Nasdaq’s blunder dinged confidence and the bourse may be on the hook financially. But Facebook’s valuation must soon stand, or fall, on its own.

Houghton Mifflin is a textbook case of bad timing

21 May 2012

Investors including John Paulson thought the Curious George publisher was still a good bet in 2010. The hedge fund manager didn’t reckon the subprime crisis he predicted so accurately would deal such a blow to the underlying economy. Houghton’s bankruptcy is a teachable moment.

The business of ice hockey has never been so good

21 May 2012

National Hockey League viewership and attendance has surged, revenue has reached $3.2 bln - even laggardly teams are getting their skates on. But you won’t hear the NHL boasting about it. Once the Stanley Cup is won, expect the gloves to come off between players and team owners.

Wanda goes fishing for cinema know-how

21 May 2012

The Chinese property giant’s $2.6 bln deal to buy AMC probably won’t bring “Beginning of the Great Revival” to 5,000 U.S. movie screens. If anything, it will help Wanda crack the burgeoning market for urban multiplexes back home. It also boosts the PRC company’s global profile.

Eaton-Cooper deal needs revenue synergies to work

21 May 2012

The U.S. industrial group’s $11.8 bln purchase of Cooper nearly defies the norm, where takeovers punish the acquirer’s shareholders. The net present value of future synergies is comfortably higher than the premium on offer, but only if additional sales are to be believed.

JPMorgan loss kicks succession race into high gear

21 May 2012

Wall Street is buzzing about the possibility that the bank’s trading losses will cost CEO Jamie Dimon his job. While highly unlikely, the whale fail’s cleanup has put two potential successors clearly in the running - it’s not yet two ferrets in a sack, but the contest has begun.

Yahoo’s Alibaba deal has simplicity on its side

21 May 2012

The internet firm has spent years trying to unravel its Asian assets while avoiding capital gains tax. This straightforward $7.1 bln transaction allows the convoluted and gaffe-prone firm to unlock value while giving Uncle Sam his due. It’s a lesson other U.S. firms should heed.

Long-awaited Yahoo deal heaps pressure on Alibaba

21 May 2012

The Chinese e-commerce giant wants new investors to fund a $7 billion buyback of shares from Yahoo. Takers may include funds who just cashed in from Facebook’s IPO. But Alibaba’s valuation leaves little room for error. New investors will want growth and, one day, an exit.

Facebook IPO features best and worst of capitalism

18 May 2012

Execrable hype accompanies the entrepreneurial achievement. Poor governance, Silicon Valley cronyism, breathless pundits spewing misinformation, manic investors and bankers in hoodies are all on display. Yet the genius of capitalism is precisely its ability to harness excess.

Risk of testifying could pay off for Raj Gupta

18 May 2012

The smart money says the former McKinsey boss and Goldman Sachs director won’t take the stand at his insider trading trial. But the prosecution’s case is circumstantial, leaving him room to explain. With the public lusting for a boardroom scalp, this is no time to play it safe.

Buffett’s investing gets sappy – read all about it

17 May 2012

The Oracle is doubling down on newspapers, buying 63 local rags. The cost is negligible for Berkshire, but Buffett’s thesis is behind online trends. Revenue may fall faster than he thinks, as other buyers have learned the hard way. The bet seems more about sentiment than value.

Facebook tax witch hunt looks in wrong place

17 May 2012

Two U.S. senators object to co-founder Eduardo Saverin’s tax “duck” on his stake in the social network now that he has given up U.S. citizenship. But becoming a non-American is expensive and complicated. Lawmakers might ask what they’re doing wrong for expats even to consider it.

UK workers overtake Germans – in cheap cars

17 May 2012

More manufacturing is what the UK government wants. And General Motors’ decision to add car-making capacity near Liverpool is a victory, beating Germany at its own game. British workers have had to become cheaper, just like the pound. That has its downside. But it’s a way from A to B.

US housing recovery shows subsidies need trimming

17 May 2012

Recent strong data, including property prices, suggest the market is bottoming. It’s cheap to borrow, too. Mortgage interest tax deductions and above all loan guarantees look ripe for cutting. The cash saved could then be put to more productive uses.

Samsung investors should worry less about Apple

17 May 2012

The Korean company’s shares slid over fears Apple might use fewer of its chips, and buy more Japanese ones instead. Apple may diversify its suppliers, but that just reflects the fact that smartphone demand is outpacing parts supply. Samsung’s valuation looks too low.

GE Capital cash cow reincarnated as goat

16 May 2012

General Electric is finally milking its finance unit after stopping dividends in 2009. But GE Capital is slimmer now and, special dividends aside, will also be passing on less of its earnings than in the past. It’s still good, just not as rewarding for its parent as it once was.

Exxon attacks straw man to defend CEO’s pay

16 May 2012

The oil giant is trying to calm shareholder anger over Rex Tillerson’s $35 mln bonanza before the say-on-pay vote at its AGM. Exxon argues that its long-term goals obviate the need for annual targets. But that just sounds like an excuse for C-suite largesse.

Law site’s IPO evokes a future beyond dying firms

16 May 2012

It’s coincidence that LegalZoom’s $120 mln float is coming as Dewey & LeBoeuf evaporates. But the rise of the U.S. online legal document site is a warning to old-line lawyers. There’s plenty of work for savvy legal eagles, but those who aren’t lean and innovative could perish.

Global sell-off could echo summer of 2011

16 May 2012

Markets fear a chaotic Greek euro exit. Unless Europe helps Athens more, the sell-off is likely to deepen. Weak global growth doesn’t help. Oil and stocks could return to last year’s lows. As then, the dollar and safe bonds are the sanctuary - but this time, gold is vulnerable.

JPMorgan shareholders give Dimon slap on wrist

15 May 2012

The U.S. mortgage hangover eclipsed last week’s trading losses at the bank’s annual meeting. And subdued investors were mostly supportive of Dimon. But they didn’t let him off entirely: 40 pct voted to split the chair and CEO roles. While falling short, it’s still a protest vote.