Americas

Freddie outrage needs to end in reform

1 Feb 2012

The U.S. mortgage giant is back in the crosshairs, this time for purported bets against homeowners. The latest tempest, however, is a distraction. Freddie Mac and Fannie Mae need fundamental remodeling. Critics would do well to focus on that rather than political point-scoring.

Post-slump, Cemex expansion looks damaging

1 Feb 2012

The Mexican cement giant grew mightily, but economies of scale top out quickly and transportation costs are high. The forecast loss for the latest quarter is modest, but if big losses outside Mexico continue the company’s $8.1 bln of debt maturing in 2014 will pose a big problem.

NYSE/DB execs deserve spanking for merger failure

1 Feb 2012

Duncan Niederauer and Reto Francioni spent a year pursuing a transatlantic tie-up that the EU never favored. While not as egregious as AT&T’s bid for T-Mobile USA, their ambitions have proven a costly distraction. At the very least, the two should forfeit their bonuses.

Google feeds regulators fresh meat to chew on

1 Feb 2012

Antitrust concerns have swirled around the Internet search giant for years. Now, changes to its data-sharing policies are causing added alarm among lawmakers. So far, Google hasn’t crossed any major legal lines. But the company, led by Larry Page, seems destined to find them.

Gingrich makes Goldman 4-letter word – to no avail

31 Jan 2012

The former House speaker is set to lose Florida despite labeling rival Mitt Romney an agent of the Wall Street firm. But Romney’s similar conflation of Gingrich’s work with Freddie Mac to the housing bust seems to have hit further home. It’s a small victory for Goldman’s image.

Apple’s creative destruction claims another scalp

31 Jan 2012

RadioShack is the latest victim. The U.S. electronics retailer plunged 30 pct as Apple’s gadgets snaffle up a bigger chunk of the mobile market. RadioShack is largely a bet upon Android - and lesser carrier Sprint. With Apple keeping more of the spoils, that bet has now gone bad.

Exxon slow and steady in race back from gas to oil

31 Jan 2012

The energy giant went big on gas with a $31 bln acquisition in 2010. With oil now almost seven times more precious than U.S. gas in energy terms, the company has been slower than rivals to move back toward crude. But there may be method to Exxon’s avoidance of a dash to liquids.

U.S. companies can do good without new legal fad

31 Jan 2012

So-called benefit corporations are coming to California and New York. The structure establishes social goals alongside the profit motive. But directors can already use business judgment to justify, say, saving the whales. The new form is mostly a solution in search of a problem.

Swiss banking rocked to its core by tax row

30 Jan 2012

U.S. authorities aren’t content to chase only giants like UBS. The country’s oldest bank, Wegelin, fell victim to the crackdown and broke itself up. Though the Swiss have tried to preserve a semblance of their financial system, the anti-haven snowball looks set to keep rolling.

Too-big-to-fail U.S. banks collecting free money

30 Jan 2012

Jamie Dimon decries red tape, yet small print in the rules may explain why JPMorgan saw a $100 bln-plus surge last year in interest-free deposits. The FDIC fully backs such accounts without limit. Big accounts tend to go to big banks, so it’s another boost for the giants.

One head at Merrill is better than three

30 Jan 2012

BofA’s investment bank is shaking things up, making Christian Meissner solo boss and redeploying two others who had shared the role with him. Merrill must still contend with the woes inside BofA and tough conditions outside. But at least it’s a cleaner structure for leaner times.

Brazil’s oil plutocracy flexes its muscles

30 Jan 2012

A foreign offshore driller has put off its IPO to appease corporate concerns of state-owned giant Petrobras. Meantime, the country’s richest man, Eike Batista, is set to extract his first barrel after navigating the bureaucracy in record time. Brazil’s oil winners keep winning.

Apple’s cash is key to unlocking suppressed value

30 Jan 2012

Though it’s the world’s most valuable company, the iPhone maker doesn’t get full credit for its near-$100 bln cash hoard or its growth. A huge special dividend could be close to a free lunch. And regularly paying out half its earnings could show why Apple may be worth $1 trln.

Revamped U.S. mortgage plan too little, too late

30 Jan 2012

The Obama administration is using the last $21 bln rattling around from TARP to cajole investors to cut struggling homeowner loans. Some may bite. But the new program won’t help enough borrowers to put housing back on track and may not entice Fannie and Freddie to participate.

Facebook IPO will put public markets to shame

30 Jan 2012

Unlike Google’s 2004 stock sale, everyone who’s anyone has already made a killing on the social network, from sharp VCs to Chinese and Russian billionaires to Goldman’s top clients. Hell, even Microsoft is up big. At $100 bln, it’s hard to imagine much is left for the hoi polloi.

ABB’s $4bln low-voltage charge stacks up

30 Jan 2012

Buying Thomas & Betts, a U.S. maker of low-voltage kit, boosts the Swiss group’s most profitable business in the world’s biggest market. The deal looks decently priced, despite a run-up in T&B stock. And it’s grounded in good opportunities to cross-sell and cut costs.

U.S. private sector emerges from government shadow

27 Jan 2012

Headline annualized U.S. GDP growth of 2.8 pct in the fourth quarter looks more anemic when inventory growth is netted out. But private sector output expanded at a more robust 4.5 pct. The government retreated in 2011 as a whole, but private enterprise is regaining strength.

A Van Winkle return to Davos and to real problems

27 Jan 2012

When this columnist last attended the World Economic Forum in 2000, everything was wine and roses. The biggest M&A deals ever were popping, the Nasdaq had another 20 pct to climb and everything looked rosy. Jump 12 years forward and it’s a different, more difficult world.

Ford’s profit fender-bender not as bad as it looks

27 Jan 2012

Falling a fifth short of Wall Street’s Q4 estimates dinged the automaker’s shares. But Ford’s balance sheet and product line-up are strong. And there are more cost cuts coming. Even allowing for the challenges its overseas operations face, Ford’s stock should be shiny again soon.

Year’s biggest M&A deal shines light on spinoffs

27 Jan 2012

Eastman Chemical, once part of just-bankrupt Kodak, is spending $4.7 bln on Solutia, a rival that went bust in 2003 after splitting from Monsanto. With spinoffs so popular these days, the deal is a timely reminder for investors that not all carve-up progeny are created equal.