United States of America

No need to dress up Exxon gas deal as an oil play

17 Oct 2012

The energy titan says it is buying Celtic to spur crude production. But the Canadian firm’s assets are 75 pct gas. The feint is understandable, given investor grumbling over Exxon’s splurge on gas producer XTO. With exports to Asia looking up, though, the $2.6 bln deal makes sense.

Latest attempt to find Libor victim: Main Street

17 Oct 2012

U.S. homeowners are accusing big banks of making money out of nudging the benchmark interest rate higher. Bringing in Joe Public could add to political pressure for tougher regulation. Even so, it’s hard to see how more than a tiny amount of harm was done.

Brian Moynihan can’t ignore Citi’s regime change

17 Oct 2012

The BofA boss has had less time in the corner office than Vikram Pandit did. But he faces the same challenges to boost performance, as the bank’s third-quarter 6.3 pct ROE shows. While improving, Moynihan needs to do more before he, too, clashes with the board and shareholders.

Murphy’s law means something new for Big Oil

17 Oct 2012

The U.S. energy company’s value jumped 8 pct after executives said they would split off its retail business. Sure, they only acted after pressure from activist investors. But if larger players like Marathon follow suit, it could unlock billions of value for shareholders.

ASML pays up for tighter control of new technology

17 Oct 2012

The Dutch semiconductor-equipment maker will pay $2.5 bln, mostly in stock, to buy out U.S. partner Cymer. A 61 pct premium looks steep, and valuation details are scant. But synergies should follow. And ASML smoothes the shift to a new generation of chip technology.

Starbucks cross-border tax tactics fail taste test

17 Oct 2012

Shareholders expect companies like Starbucks to keep tax payments as low as can be. Customers may benefit. But multinationals should be careful about pushing too much profit into low tax jurisdictions. Even legal tax avoidance can irritate the governments which lose out.

Pandit succumbs to “three strikes you’re out” rule

16 Oct 2012

A trio of failures, not all of his making - pay, dividends and Smith Barney - lost him the confidence of shareholders, regulators and the board. It was time to go. Mike Corbat is solid. But radical change like a value-enhancing breakup would be a more surprising move for Citi.

Goldman exceptionalism remains elusive

16 Oct 2012

The bank’s Q3 net income beat Wall Street forecasts and enabled a small dividend hike, but the 8.6 pct return on equity still wasn’t enough to cover the bank’s cost of capital. Goldman CEO Lloyd Blankfein has more room to maneuver than Citi’s boss, but the bar is also far higher.

Stock investors vault ahead of housing recovery

15 Oct 2012

Economic signals point to a U.S. property rebound, but the bulls may be chasing a mirage. Last week saw a big bump for a real estate agency’s IPO. Home Depot trades well above its bubble-era highs. Fundamentals suggest the market has bottomed, but a boom still looks distant.

Amped-up Carlyle gulps double dose of muscle milk

15 Oct 2012

After bulking up with acquisitions all this year, its first as a public company, the buyout firm is now stretching the balance sheet at vitamin maker NBTY to pay itself a $720 mln dividend with PIK-toggle debt. Such juicing may be easy again, but can have risky side effects.

Citi’s mediocrity shines through dark quarter

15 Oct 2012

Two big Q3 hits left the mega-bank with just a 1 pct return on equity. Excluding them boosts net income to $3.3 bln, though still with a meager ROE flattered by loan loss releases. Operating leverage progress is welcome, but it’s time for CEO Vikram Pandit to raise Citi’s game.

Sprint shareholders have most to smile about

15 Oct 2012

Softbank’s $20 bln deal to buy 70 pct of the U.S. cellphone operator hands them a premium of about 30 pct. The Japanese group’s owners aren’t keen. Meanwhile, Sprint’s mountain of debt will shrink thanks to an $8 bln cash injection. But it will still be weak compared to rivals.

Nobel economics prize a welcome nod to match-makers

15 Oct 2012

Americans Alvin Roth and Lloyd Shapley won the 2012 Nobel prize for economics for their research on efficient match-making. It shouldn’t come as a shock. Unlike sexier fields like finance, successful matching can claim it fixes systems - and even saves lives.

Bernanke’s Asian defence is an implausible yarn

15 Oct 2012

The Fed chief claims money printing by advanced nations is not the “dominant” force behind surging capital flows to emerging economies, and that they benefit from stronger demand in the West. Evidence suggests his first claim is wrong, while the second is impossible to verify.

Solid quarter doesn’t bust ghost of Dimon’s whale

12 Oct 2012

The JPMorgan boss has $5.7 bln of Q3 profit to crow about - a third more than a year ago. Dimon’s standing took a drubbing earlier this year after dodgy trades cost the firm about $6 bln. Now he can breathe easier, but it’s too early to go back on the anti-regulation offensive.

Review: Bairing the strain of failed regulation

12 Oct 2012

Former U.S. bank regulator Sheila Bair is by no means perfect, as several incidents in “Bull by the Horns” demonstrate. But she put taxpayers first and argued for banks to shoulder more of the burden for the industry’s failures, which is how the system is supposed to work.

New York festival features Hollywood’s new finance

12 Oct 2012

Amid blockbuster debuts of Steven Spielberg’s “Lincoln” and Ang Lee’s “Life of Pi,” the Big Apple’s 50th annual movie jubilee is showcasing small-budget productions like “The Last Time I Saw Macao.” Such indie and foreign films are reshaping the industry’s investment model.

Softbank-Sprint tie-up gets bad signal from market

12 Oct 2012

Investors wiped $6.9 bln off the Japanese telco’s value on Oct. 12, three times the boost to its U.S. target. The deal would stretch Softbank financially, and may preclude smaller purchases closer to home. CEO Masayoshi Son has shown chutzpah; he must show discipline too.

Wall Street, City pay still must fall by a third

11 Oct 2012

Morgan Stanley’s boss is right that investment banking is overstaffed and overpaid. The bill for traders, advisers and money managers at seven global firms needs to drop by about $30 bln, a Breakingviews calculator shows, to give shareholders a shot at decent returns on equity.

If buyout firms conspired, they were bad at it

11 Oct 2012

Newly disclosed emails appear to support allegations that Blackstone, KKR and others colluded to keep prices down. Yet many of those pre-crisis mega-deals like Freescale and TXU have turned out terribly. Guilty or not, the case should worry investors in private equity firms.