United States of America

Vertex’s $2.5 bln error more comedy than tragedy

29 May 2012

The biotech firm’s value plunged 18 pct after it admitted a basic statistics mistake, confusing relative with absolute improvement for a new drug combination for cystic fibrosis. Such a bone-headed error is careless, but comical rather than fatal. The share slump looks overdone.

Japan’s $3.6 bln Gavilon buy goes with the grain

29 May 2012

Marubeni’s swoop on U.S. agricultural specialist Gavilon can be put down to a strong yen and commodity traders’ quest for scale. As long as China’s appetite for commodities keeps growing, so will M&A among its suppliers.

Is the Fed too complex to manage, too?

25 May 2012

That’s usually a question for big banks like recently humbled JPMorgan. But it’s also not a bad one for the U.S. central bank.  From the role of JPMorgan’s Dimon on the New York Fed board to the institution’s forays into housing policy, Bernanke’s Fed seems to be pleasing no one.

Wal-Mart shareholders can make their protest count

25 May 2012

With half the votes sewn-up by the Walton family, directors tainted by the retailer’s Mexican bribery scandal look safe in their seats. But investors disturbed by Wal-Mart’s cover-up should make their displeasure known just the same by targeting Chairman Robson Walton himself.

General Mills doubles down on Brazilian consumer

25 May 2012

The U.S. producer of Lucky Charms cereal and Yoplait yogurt has snatched privately-owned Brazilian-Japanese food group Yoki for some $1 bln, a move well timed with a weak real. The current economic slowdown aside, Brazil’s growing middle class is still attractive.

Blankfein enjoys rare moment of public approval

24 May 2012

The Goldman Sachs boss emerged from the firm’s annual meeting not just unscathed but praised. The Wall Street bank had already headed off a vote to split the chairman and CEO roles. With protestors scarce and a regular past critic absent, Blankfein had an easier AGM than rivals.

Goldman renewable energy dash more than greenwash

24 May 2012

The Wall Street firm says it will deploy $40 bln over a decade. It isn’t above self-serving spin, but it’s also never far from the money. With solar and wind power nearing competitive cost levels, clean energy could burnish Goldman’s bottom line as well as its green credentials.

Chesapeake could use a fresh start in a new home

24 May 2012

The embattled U.S. gas producer faces a shareholder vote to reincorporate in Delaware. The board’s argument that Oklahoma’s stiff takeover defenses better serve shareholders is a stretch. Chesapeake needs a governance overhaul. A new legal address would be a good first step.

Mike Lynch should try to buy Autonomy back

24 May 2012

The software group’s founder is leaving HP months after the U.S. tech giant bought it for $11 bln. Other Autonomy execs had already gone. Having overpaid, HP is suffering the cultural woes of M&A. As for Lynch, he could yet exploit the mess to buy his baby back at a decent price.

JPMorgan’s board could use some new blood

23 May 2012

It takes a lot for Citi and BofA to make JPMorgan look out of step. Jamie Dimon’s Paleolithic board does just that, though. Last week’s governance protest vote and the CIO losses highlight the need for new directors with relevant financial experience to keep the CEO on his toes.

Facebook flop damages friends and enemies alike

23 May 2012

Shares of Zynga, Yelp and Renren were proxies for the social network before its IPO. But the benefits of such firms are less obvious. Facebook’s debut sucked capital from them and growing skepticism over its future may translate into pessimism about these companies’ prospects.

One reason for Facebook IPO mess: Zuck didn’t care

23 May 2012

From the get-go, Mark Zuckerberg made clear he had little interest in welcoming public shareholders. His voting advantage codified the fact. A strong CEO can temper short-term urges elsewhere. But when he’s indifferent, it makes a failed process like Facebook’s more likely.

Ford shakes off last vestige of deadbeat status

23 May 2012

Moody’s has given the Detroit automaker its second high-grade rating in a month. Among other things, Ford can now reclaim the blue oval trademark it pawned in 2006. The firm isn’t in perfect shape, but it is leaving a painful period behind. Now it just needs to stay focused.

Did Chesapeake miss Enron lessons?

22 May 2012

There have been no allegations of fraud. But the embattled U.S. natural gas producer’s vast trading operation, fondness for complicated holdings and relationships, and corporate generosity are among the traits that call to mind some of the defunct energy giant’s flaws.

Wells Fargo makes boring banking look brilliant

22 May 2012

The west coast-based bank has long commanded better multiples than more complex rivals. Now its returns look solidly better, too. With JPMorgan’s trading loss renewing focus on reforming Wall Street, shareholders may find the lure of simpler, sleepier banks too exciting to miss.

JPMorgan hits Washington’s reset button

22 May 2012

U.S. senators who oversee the banking sector slammed regulators on Tuesday for apparent lapses related to JPMorgan’s trading losses. Other Dodd-Frank tweaks that had been moving along are grinding to a halt. Glimmers of hope for clear bank rules look all but squashed for now.

China diversified dot-coms avoid Facebook pitfalls

22 May 2012

Fears that the advertising-led model is weak drove down shares in Renren, but other Chinese dot-coms are better positioned. Many have traditionally focused more on gaming, where revenues are still surging. Diversified players like Tencent are more recession proof.

Nasdaq howler can’t explain Facebook flop for long

21 May 2012

The exchange is still clearing up after a systems snafu left the social network’s stock trading in the dark after its Friday IPO. Nasdaq’s blunder dinged confidence and the bourse may be on the hook financially. But Facebook’s valuation must soon stand, or fall, on its own.

Houghton Mifflin is a textbook case of bad timing

21 May 2012

Investors including John Paulson thought the Curious George publisher was still a good bet in 2010. The hedge fund manager didn’t reckon the subprime crisis he predicted so accurately would deal such a blow to the underlying economy. Houghton’s bankruptcy is a teachable moment.

The business of ice hockey has never been so good

21 May 2012

National Hockey League viewership and attendance has surged, revenue has reached $3.2 bln - even laggardly teams are getting their skates on. But you won’t hear the NHL boasting about it. Once the Stanley Cup is won, expect the gloves to come off between players and team owners.