Americas

Law school deans could do with some Econ 101

17 Apr 2012

Tuition at the likes of Yale and Stanford keeps rising faster than inflation, despite fewer aspiring lawyers in the United States. And job prospects for graduates are getting worse. Despite their advanced skills, legal educators haven’t yet mastered the law of supply and demand.

Temasek tinkering could put StanChart in play

17 Apr 2012

The Singaporean fund’s latest asset reshuffle has revived talk about its $10 bln stake in the emerging market lender. Banks from the U.S. to Japan would like to get their hands on StanChart. But with the exception of China’s biggest lenders, most would struggle to pull it off.

Repsol has to fight Argentina’s oily expropriation

16 Apr 2012

Buenos Aires’ leftist government is taking control of YPF, the oil and gas company 57 percent owned by Repsol of Spain. Worse, it seems that the state may be nationalizing only Repsol’s shares. Argentina’s naked power play may be overwhelming, but the Spanish should not just roll over.

YPF seizure follows long, sad Argentine tradition

16 Apr 2012

One of the world’s first state-controlled oil firms is being reclaimed. Such nationalistic tendencies stretch back nearly a century. Juan Peron, founder of President Fernandez’s party, also grabbed many businesses in the 1940s. But commodity prices don’t stay high forever.

Brazilian billionaire banker tests investor mettle

16 Apr 2012

Just days ahead of an IPO of his BTG Pactual, Andre Esteves has been fined for insider trading by Italian watchdogs. The firm shrugged off the case and says the boss will appeal. But JPMorgan’s Ian Hannam resigned to fight similar charges. The risks look big for this high-flyer.

Big Oil chief payouts flow too freely

16 Apr 2012

Rex Tillerson and John Watson, the respective bosses of Exxon and Chevron, earned $60 mln between them last year after big pay hikes. But Exxon’s lead is shrinking and Chevron’s newish CEO can’t take credit for closing the gap. Rising oil prices don’t make such packages deserved.

Citi gets back on slow track to bumper returns

16 Apr 2012

The megabank recovered in Q1 after a dismal end to 2011 and a poor showing on the Fed’s stress test. That should reassure shareholders it’s making its way to handing back $12 bln a year to them. But with equity returns low and bad assets still a drag, it probably won’t be soon.

Maybe banks needn’t overly fear new U.S. watchdog

16 Apr 2012

Crass resistance to the Consumer Financial Protection Bureau looks even more overblown following one of its first big proposals. The agency will crack down on deceptive practices on riskier loans but is OK with banks charging fees for them. That strikes a reasonable balance.

Infosys U.S. woes tarnish India’s star sector

16 Apr 2012

Outsourcing was a bright spot amid worries about India’s growth prospects. But an investigation into alleged visa violations by Infosys could herald a tougher time for the industry. Until the IT group’s papers are in order, investors have another reason to shun Indian stocks.

Wells Fargo justifies its premium to JPMorgan

13 Apr 2012

The top two U.S. banks performed solidly enough in Q1. But both posted ho-hum 12 pct returns on equity flattered by government programs and extra risks. Wells, however, has better core growth and relies less on trading. That makes it deserving of a higher valuation than JPMorgan.

Tumi IPO should bag Doughty Hanson a big return

13 Apr 2012

The high-end suitcase-maker is set for a $300 mln float. Making luggage a bit more luxurious has helped Tumi double sales under Doughty Hanson. The UK buyout firm is likely to recoup six times its original investment, a thumping 26 pct annual return.

Review: "Idea Factory" produces a few of its own

13 Apr 2012

How does innovation happen? Jon Gertner outlines how brilliance, contradictions, chance and steady hands resulted in five decades worth of astonishing products such as radar and Nobel-prize winning ideas like the transistor at Bell Labs.

Resource nationalism can have a bright side

13 Apr 2012

A rumored nationalisation of Argentina’s biggest oil firm still hasn’t materialised. Resource nationalism is a perennial problem, though not all of it is as counter-productive as Buenos Aires’ harassment of YPF. Shareholders suffer. Production and market stability don’t have to.

Google rejoins tech’s governance race to bottom

12 Apr 2012

Zynga and Facebook show little regard for common shareholders. Google is copying its rivals’ shenanigans by adding a third class of non-voting shares eight years after leading the dual-stock charge. That’ll entrench insiders and enable the future abuse of minority shareholders.

Green energy may yet survive poison of cheap gas

12 Apr 2012

The collapse of U.S. natural gas prices below $2 is a fresh blow to solar just as another industry IPO is pulled. But don’t write it off. Solar is getting cheaper, too, and providers can set costs for decades. Gas, which America may soon be exporting, offers no such guarantee.

JPM, Wells boards are hurdle to governance revamp

12 Apr 2012

Both banks navigated the crisis well. But that doesn’t mean they don’t need separate chairmen and CEOs. The firms’ boards are stuffed with company honchos used to holding both titles. It may take shareholder votes to open their eyes to the clear merits of splitting the top jobs.

Oaktree IPO gets marked to Howard Marks

12 Apr 2012

The investment firm’s co-founder made clear from the start that gathering assets takes a backseat to generating client returns. Investors took him to heart, buying fewer shares and now whacking them. Shareholders hungry for fees will find a growing Carlyle more to their liking.

U.S. sale could kickstart Aviva’s spring clean

12 Apr 2012

The UK-based insurer is mulling a sale of its U.S. arm, according to reports. Offloading North American operations would make regulatory sense. But it would also be a welcome sign that Aviva is getting to grips with parts of its empire that aren’t pulling their weight.

Coty will need to up its Avon game

11 Apr 2012

The U.S. cosmetics group has spurned Coty’s $10 bln approach and hired a new CEO. If Avon’s European suitor is really keen to marry makeup to its fragrances, it needs to pay more. A new Breakingviews calculator shows just how much bigger Coty’s proffered engagement ring could be.

If Apple, publishers plotted they didn’t need to

11 Apr 2012

U.S. trustbusters say Apple and e-book producers conspired to raise download prices. But the model they came up with makes sense even without collusion. It gives publishers a better chance of survival. And if readers pay a bit more, at least it means books will keep coming.