United States of America

Walmex bribery woes may offer investors a bargain

24 Apr 2012

Wal-Mart’s Mexican unit saw more than $7 bln of market value vanish on allegations that its former boss authorized $24 mln of bribes. This looks like an over-reaction. Not only do Mexican authorities have bigger fish to fry, Walmex has no need to grease palms to keep growing.

Telus spat shows risk of shareholder caste system

24 Apr 2012

The Canadian telco is trying to get rid of its non-voting shares just as Google, for one, is introducing them. Telus is on the right governance track, but its tussle with a hedge fund over the exchange ratio shows why multiple classes of stock should be avoided in the first place.

Facebook infected by Google’s antitrust limbo

23 Apr 2012

The social network isn’t even public, yet acquisition targets may already be concerned. Instagram commanded a 20 pct break fee if its $1 bln sale isn’t consummated by December. That’s a wise safety measure given the life cycle of apps and Facebook’s lurking antitrust risks.

Bribery case against Wal-Mart harder than it looks

23 Apr 2012

U.S. law bars payoffs for new contracts from foreign officials. But Wal-Mart Mexico allegedly greased low-level palms to grow existing business. That’s arguably not covered. Watchdogs should beware bending an already suspect law to punish what may technically just be unethical.

Biotech’s blistering M&A pace should continue

23 Apr 2012

The industry is off to one of its best years in a decade. As Pfizer’s sale of its nutrition business for $12 bln suggests, Big Pharma is forgoing mega-deals for smaller, targeted acquisitions of innovators like Ardea and Amylin, who are needed to refill empty drug pipelines.

Wal-Mart scandal demands spirit of Sam Walton

23 Apr 2012

Chairman Rob Walton must channel his father’s integrity and initiate an independent probe into how managers, including current executives, suppressed strong evidence of widespread bribery and corruption in Mexico. To recover, heads will need to roll without fear or favor.

Conoco’s last pre-split report better than it looks

23 Apr 2012

A decline in first-quarter profit to $2.9 bln suggests the U.S. oil giant, soon to split in two, is going out with a whimper. But underlying growth trends in chemicals and U.S. oil could boost prospects at the slimmed-down Conoco and at Phillips 66, the new standalone refiner.

Pfizer baby food gives Nestle a $12 bln sugar rush

23 Apr 2012

The Swiss food giant is paying a hefty 4.9 times sales for the U.S. group’s infant nutrition arm. That’s partly down to an M&A tug-of-war with rival Danone. But it also reflects Nestle’s rock-solid balance sheet - and the scarcity of big emerging-market growth plays.

GE offers Citi starting point for fixing CEO pay

20 Apr 2012

Investors voted against Vikram Pandit’s comp largely due to his wooly incentive plan. Facing similar discontent last year, GE added decent hurdles to better align boss Jeff Immelt’s pay to the conglomerate’s performance and shareholder returns. Citi should go a step further.

Ackman gets closer to permanent capital grail

19 Apr 2012

The activist hedgie’s planned $4 bln London-listed vehicle would dwarf other public funds, which often trade at a big discount to net asset value. The scale plus fee sweeteners may give Ackman an edge. And his focus on easily priced bets could shrink the NAV problem.

Twitter gives peace a chance in patent wars

19 Apr 2012

The social network will allow engineer-inventors to veto lawsuits against alleged infringers. That’s a model for curbing the expensive legal salvos that Apple, Microsoft and others lob just to slow each other down. If the rest of tech one day follows, innovation could benefit.

Verizon Wireless sneeze will sicken some rivals

19 Apr 2012

The No. 1 U.S. cellphone service provider will unload valuable, unused spectrum if it gets regulatory approval to buy other licenses. The decision up-ends conventional wisdom that operators can’t have too much spectrum. That’s bad news for hoarders like Dish Network and Clearwire.

Morgan Stanley merits immunity from Moody’s blues

19 Apr 2012

The credit rater is considering a three-notch downgrade of the Wall Street firm. But Morgan Stanley’s first-quarter results show it’s making good progress with its turnaround. It also now boasts a huge three-year liquidity buffer. Given that, a rating cut would be bizarre.

BofA doesn’t deserve much more love from investors

19 Apr 2012

The 60 pct rally in the bank’s shares this year easily bests its peers. But its Q1 results, though better, leave much to be desired. Its return on equity is still in the dumps even after stripping out the noise. At around half of book value, its stock now looks fairly valued.

Frannie generosity could cost taxpayers $128 bln

18 Apr 2012

Their regulator appears close to caving and may allow the agencies to reduce loans for underwater borrowers. That shouldn’t be a problem if aid is well targeted. But political pressure could turn such loan forgiveness into a moral hazard and almost double Frannie’s bailout tab.

News Corp finds yet another way to annoy investors

18 Apr 2012

The Murdoch empire’s discovery that non-U.S. holders control 36 pct of its voting stock - breaching the 25 pct limit for owners of American broadcasters - has led it to suspend voting rights. Even shareholders resigned to disenfranchisement should worry about the cock-up.

Watchdogs adopt smart pragmatism on swaps trading

18 Apr 2012

The SEC and CFTC are whacking up the volume threshold for being dubbed a dealer to $8 bln. That 80-fold increase might seem like they’re caving to industry pressure. But it’s a more realistic level that will let the market function while still ensnaring the market’s big players.

U.S. gas export advance heralds end of low prices

18 Apr 2012

Less than a week after rates slipped below $2 for the first time in a decade, America approved the nation’s first big liquefied natural gas plant in 50 years. Others will follow. That may signal a bottom for ultra-cheap supply - and should result in a more stable market.

Roche runs out of room in $7 bln Illumina bid

18 Apr 2012

The Swiss drugmaker is walking away after failing to cajole the gene-sequencing firm into talks. Shareholders clearly weren’t pushing Illumina to the table, and a wobble in its shares now won’t change that. But Roche could return if the stock continues to languish.

Buffett at least learned one thing from Steve Jobs

18 Apr 2012

The 81-year-old investing icon disclosed his prostate cancer - and pledged to keep Berkshire shareholders updated of any changes. The candor is a refreshing contrast to how the late Apple CEO guarded details of his illness. An unfortunate similarity is mystery over succession.