Giant electric utility could net Uncle Sam $20 bln 11 Apr 2013 That’s what the Tennessee Valley Authority might be worth if Washington decides to sell it off. There are lots of caveats, financial and political. But it’s hard to see why the New Deal-era TVA needs to be publicly owned now. And every few billion helps balance the federal books.
Goldman pulls corporate governance fast one, again 11 Apr 2013 The Wall Street biggie has, for a second year, persuaded an uppity shareholder to drop a request to split the chair and CEO roles. Goldman is attempting to strengthen the board, if at a glacial pace. But giving investors a vote on the matter would be preferable by far.
Beside GDP, the new Social Progress Index is weak 11 Apr 2013 The new Social Progress Index sounds as if it might measure the development of nations more convincingly than crude GDP. Sadly the SPI input indicators are arbitrary, and the decision to omit economic output is silly. The results are either unsurprising or weird.
CEO Corbat puts Citi at heart of DC’s matter 10 Apr 2013 The bank’s new boss is cutting the ribbon at a new Washington branch. It’s not just any old location, but on K Street, home to the city’s legions of lobbyists. It may symbolize a more engaged Citi. Shareholders might like that. For watchdogs, it’s a sign to stay on guard.
Bausch & Lomb IPO should be seen through new lens 10 Apr 2013 Warburg Pincus bought the eye care company for $3.7 bln during the buyout boom. The private equity firm is reportedly seeking a price tag of up to $10 bln. Even after fixing Bausch & Lomb’s problems, it’s still not worth a premium to, say, Merck. About $8 bln makes more sense.
Obama puts other people’s money where his mouth is 10 Apr 2013 The president doubles down on taxing the rich as the Buffett levy makes an official appearance. New revenue is the centerpiece of Obama’s deficit-cutting ambitions, with millionaires, buyout bosses and smokers targeted. That probably dooms his budget plan - and a big debt deal.
Cyprus and Jamaica – a tale of two island bailouts 10 Apr 2013 Both have a $25 bln tourism-led economy, and both will get about $1 bln in help from the IMF. Sure, Cyprus has its banks, while Jamaica has bauxite. Those differences aside, no euro shackles are needed for low growth and declining productivity to make it hard to keep on moving.
Ethical economy: In favour of the living wage 10 Apr 2013 The minimum wage is just one part of the complex pay arrangements in modern economies. In the U.S., it is a dysfunctional part. The welfare system reduces the injustice, but with more than sufficient to go around, it should be possible to pay all workers enough to support themselves.
Ackman’s retail obsession is elusive white whale 9 Apr 2013 The J.C. Penney debacle is just the latest mishap in the sector for the hedge fund manager. Bets on Borders and Target ended badly. Spurning a buyout for J.C. Penney looks increasingly foolish. Ackman is fascinated by retail fortunes, but his is more likely to be made elsewhere.
Occidental shows why ex-CEOs don’t belong on board 9 Apr 2013 Reports suggest the oil company’s chairman and former chief executive is pushing to oust current boss Stephen Chazen. Tension between the two was predictable. Avon and others have shown no good comes from letting predecessors hang around. The board needs a better succession plan.
Excessive vacancies are a travesty of Justice 9 Apr 2013 Several key posts remain open at Barack Obama’s law enforcement department as deadlines loom to file financial crisis-linked cases. The president is already under fire for not nailing Wall Street miscreants. It’s starting to look like he and the Justice Department are giving up.
Satellite IPO launches risk tolerance into orbit 9 Apr 2013 Intelsat is seeking a valuation on a par with listed rivals for equity worth $2.4 bln. However, the company, backed by BC Partners and Silver Lake, carries over $15 bln of debt. Growth also has been slow. If investors are ready to buy, it suggests confidence is heading sky-high.
J.C. Penney exposes inefficiency valuing CEOs 9 Apr 2013 After hiring Apple whiz Ron Johnson, the struggling U.S. retailer’s equity value spiked by more than $1 bln. Less than two years later, his departure added $350 mln. Then, the return of ex-CEO Mike Ullman swiftly erased some $700 mln. Such big swings make no sense.
U.S. workers stuck with euro-style sluggishness 9 Apr 2013 GDP and unemployment data suggest a much stronger recovery in the U.S. than in Europe. But adjust for demographic changes, and working-age people aren’t feeling much difference. Neither Washington nor the euro zone has found a policy mix that works especially well.
GE shareholders close gusher on bolt-on oil deals 8 Apr 2013 Their reaction to its $3 bln Lufkin swoop is more realistic than the wowed reception an earlier acquisition got. Lufkin’s a strong player in a growing sector. But previous deals did little for margins and the latest carries a 38 pct premium. Tempering the optimism looks fair.
New ideas on TBTF, even if flawed, still welcome 8 Apr 2013 A coming U.S. bill will try again to end bailouts by forcing big banks to hold more capital against total, not risk-weighted, assets. It has the appeal of simplicity - and some drawbacks. At least the proposal will help keep lawmakers and shareholders focused on a crucial issue.
Owners deserve right to resell book, byte or bean 8 Apr 2013 U.S. courts say peddling used tomes is fine, but digital tunes are different. The jury is still out on genetically altered legumes. It need not be so complicated. The legal concepts of “fair use” and “first sale” are broad enough to satisfy consumers and rights holders alike.
Low interest rates stoke retirement funding pain 8 Apr 2013 Big U.S. company pensions are nearly $400 bln under water, and a new survey shows baby boomers losing confidence in their finances and increasingly likely to delay retiring or continue some work. Each year of low rates worsens the problem – and the battles over who pays for it.
New despair seeps out of U.S. employment numbers 5 Apr 2013 The economy added just 88,000 new jobs in March. And the number of people counted as available to work fell to its lowest level in 34 years, with disability claims up 25 pct since the boom. This new combination of low growth and long-term unemployable is a worrying trend.
Is Exxon building Big Oil’s skyscraper equivalent? 5 Apr 2013 The oil giant is planning a $24 bln floating facility to process gas. By the time this monster island is finished, the world could be awash in cheaper energy. It may one day resemble the towering edifices constructed on land that heralded market plunges and economic downturns.