Americas

Congratulations Google, you’re now a conglomerate

15 Feb 2012

U.S. and EU antitrust authorities have cleared the search firm’s $12.5 bln purchase of Motorola. Its hardware foray might open new markets - or be a vital means of defending its advertising business. But on Wall Street, diversification like this merits a valuation discount.

Next World Bank boss will wear troubleshooter hat

15 Feb 2012

Robert Zoellick’s successor is apt to spend less time doling out cash. The agency’s share of investment in poor nations has shrunk and global growth is culling its client list. With failed states a bigger business, the next president should be less a banker and more a fixer.

Gridlocked Congress might respond to docked pay

15 Feb 2012

California now cuts lawmakers’ income if they don’t pass budgets on time. That could work in Washington, too, where a bill to the same effect was just introduced. As Wall Street knows, financial incentives are powerful. Many politicians would be loath to lose generous perks, too.

LightSquared darkens skies for Falcone’s Harbinger

15 Feb 2012

The U.S. FCC has dealt a huge blow to the wireless business on which formerly high-flying hedgie Philip Falcone bet his firm’s future. Harbinger’s main fund lost nearly half its value last year and the SEC is circling, too. The firm’s time looks to be running out.

Kellogg rescues P&G from over-cleverness

15 Feb 2012

The maker of Corn Flakes and Froot Loops is paying $2.7 bln for Pringles, the snacks business that P&G hoped to sell to Diamond Foods in a complex tax-minimizing deal. Kellogg can justify a premium, while P&G will net less after tax. But the consumer giant gets a valuable lesson.

Corporate nurture can end up stifling

15 Feb 2012

There was a time when Yahoo helped Alibaba, Glencore was vital to Xstrata and Steve Wynn leaned on Kazuo Okada. But fortunes change, relationships become less mutually beneficial - and shareholders often wind up losers. It’s a problem, but one that may not have a solution.

High yield U.S. tourists sail into European storm

15 Feb 2012

The European Central Bank’s cheap money and the siren call of high yields are luring global investors into the European junk bond market. But the region’s slowing economy could suck the wind out of the market’s sails.

Alibaba and Yahoo could live unhappily ever after

15 Feb 2012

Talks on Alibaba buying back Yahoo’s stake in the Chinese tech giant may have hit an impasse. The deal’s valuation, structure and its financing are key roadblocks. This adds more strain to their relationship. They may want to rebuild trust before going back to the table.

Steve Wynn comes up unlucky in business love, too

14 Feb 2012

The casino magnate has already divorced the same woman twice, the second time coughing up a $1 bln stake in Wynn Resorts. Now, his decade-long financial union - and close friendship - with pachinko king Kazuo Okada is also on the rocks. Even in Las Vegas, money can’t buy love.

Fed’s Capital One/ING deal delay raises questions

14 Feb 2012

The watchdog has finally approved the bank’s proposed $9 bln marriage to ING Direct. The largest post-crisis bank deal warranted added parental concern. But they are a good match and pose little threat. Keeping them waiting at the altar seemed borderline heartless.

Anti-Chavez Capriles won’t solve Venezuela’s woes

14 Feb 2012

Misguided policies brought decline for decades before Hugo Chavez’s 1998 arrival. A win for Henrique Capriles might restore investor confidence, but he’d face huge debts and a populace accustomed to state handouts. Unless oil goes to $200 - and sticks - his task looks thankless.

Carlyle makes a mint in $1 bln cash-handling sale

14 Feb 2012

The buyout firm may make a near-40 pct annual return on Talaris, a maker of money-counting kit. Carlyle nurtured a corporate castoff, and bet against the supposedly rapid trend to a “cashless” society. The big win also alleviates the same fund’s embarrassing Greek blow-up.

U.S. payroll tax fight shows faux fiscal restraint

14 Feb 2012

Using seized mortgage backers Fannie Mae and Freddie Mac to fund a short extension of the tax cut was bad enough, but Congress is about to do worse. It’s ready to pay for another 10 months’ worth by adding $100 bln to the deficit. Politics and dogma are foiling needed discipline.

Dreamworks’ China deal won’t be access all areas

14 Feb 2012

Vice President Xi Jinping may unveil a China joint venture for the creators of “Kung Fu Panda” as part of his U.S. tour. China’s $2 billion in annual cinema takings mean a back-row seat is better than nothing, but the deal does little to level the playing field for foreign media.

Volcker muddies debate about his own rule

13 Feb 2012

The former Fed chairman’s eleventh-hour comments serve as a decent primer for why banning prop trading is a good idea. But he doesn’t address any of the practical concerns big banks have raised. And Volcker’s argument about the downside of liquidity seems a dangerous red herring.

U.S. budget can-kicking is running out of road

13 Feb 2012

Barack Obama’s $3.8 trln plan is more position paper than economic blueprint, as soaking the rich is a non-starter with Republicans. And when politicians promise deficit-reduction jam in future years, tomorrow rarely comes. But for both parties, the fiscal reality soon will.

Complexity caps allure of Yahoo’s Alibaba solution

13 Feb 2012

A mostly cash split-off promises a tax-efficient way for the troubled U.S. Internet firm to cut its stake in a Chinese rival. Yahoo also would accept a group of assets as part of the deal being discussed. But the more elaborate it gets, the more diluted the benefits may be for Yahoo.

Chesapeake’s debt diet lacks commitment

13 Feb 2012

A fresh plan for up to $12 bln of asset sales didn’t resonate with the gas firm’s investors. Previous such efforts haven’t lived up to expectations and much of the latest plan merely involves swapping obligations. More discipline and less financial engineering would go further.

Empire State Building better to visit than buy

13 Feb 2012

The iconic edifice that King Kong climbed almost 80 years ago is set to go public. Tourism and broadcasting make it the biggest revenue generator of Empire State Realty Trust’s 12 buildings. But with a rising challenge downtown, fans may prefer scaling the tower to investing in it.

New Petrobras CEO needs to flex political muscle

10 Feb 2012

A 52 pct drop in Q4 profit shows what Maria das Graças Foster is up against. The $200 bln Brazilian energy group’s refining losses, exploration bottlenecks and swollen capex budget are more political than operational problems. Foster’s engineering skills alone won’t solve them.