More winners than losers if AT&T deal fails 1 Sep 2011 The operator’s top brass and lawyers will obviously look awful if the $39 bln deal collapses. It’s not yet obvious how T-Mobile and Verizon would fare. But telecom equipment and handset firms, as well as the likes of Sprint, LightSquared and Crown Castle all stand to gain.
U.S. bank boss ouster undermines cult of CEO 1 Sep 2011 Surprise changes at the top, especially ones with mealy-mouthed excuses, don’t typically go down well with investors. But BNY Mellon became about $1 bln more valuable after the departure of boss Bob Kelly. Evidently investors, like the board, considered him entirely dispensable.
Irene should blow U.S. utility deal off course 1 Sep 2011 The $4.2 bln merger of Northeast Utilities and NSTAR is up for approval. But blackouts following the hurricane have exposed NU’s deficiencies serving customers despite charging America’s highest rates. Regulators should ensure service is on a better track before they OK any deal.
Big pharmacy deal confronts past and now present 1 Sep 2011 Wall Street is betting there’s almost no chance trustbusters will approve the $29 bln acquisition of Medco by rival Express Scripts. Though overly pessimistic, two nixed healthcare mergers in the late 1990s and the challenge to AT&T’s deal provide good reason for skepticism.
More U.S. mortgage help isn’t needed 1 Sep 2011 There’s talk of yet more help for careworn borrowers. Washington has already made Herculean efforts. Some were valuable, but there’s no magic bullet and the modest returns are diminishing. It would be better for lawmakers to deploy precious capital, real and political, elsewhere.
Obama’s watchdogs call AT&T’s $39 bln wager 31 Aug 2011 The No. 2 U.S. mobile company bet it could persuade regulators that buying No. 4 T-Mobile would benefit consumers. The U.S. DOJ senses a weak hand. With the industry a near duopoly, the government’s read looks right. AT&T isn’t folding but looks on the verge of a bad beat.
Exxon’s Russian coup rubs salt in BP’s wounds 31 Aug 2011 The U.S. oil group’s Arctic exploration agreement with Rosneft mimics BP’s aborted deal but without the $16 bln share swap. Instead, there’s Russian access to U.S. drilling projects. Assuming no hidden snags, Exxon could become the big winner from BP’s botched Russian strategy.
Tar sands pipeline environment fears are overdone 30 Aug 2011 Despite a sanguine State Dept, there’s heavy opposition to a $7 bln pipeline bringing Canadian oil to Texas. But oil sands are less dirty than their reputation, and the U.S. buys crude from worse polluters. There are better ways to control emissions than boxing in Canada’s oil.
Groupon’s gaffes give fair warning to investors 30 Aug 2011 The run-up to the web coupon company’s IPO has been a string of embarrassments. Promised profits disappeared in filings, the chairman put his foot in his mouth and now the CEO has made comments that appear to skirt SEC rules. Forget valuations, this company should be avoided.
Obama’s new economist faces political headwinds 30 Aug 2011 With U.S. unemployment hovering above 9 pct, Alan Krueger - a Princeton labor market expert - is suited to be the next White House chief economist. But his job creation ideas may not get much of a hearing. With Obama campaigning, political pros will have the president’s ear.
CCB sale underlines BofA’s slow road to recovery 30 Aug 2011 Offloading some $8 bln of the Chinese bank’s shares is a double boost to capital. Along with Buffett’s investment and future earnings, it should help put BofA back on track. But none offers a quick fix. Economic and mortgage woes will leave shareholders dangling for some time.
Mother Nature threatens another mark on markets 30 Aug 2011 Just days after a rare earthquake, Wall Street faces a more serious disturbance from Hurricane Irene. The storm may still fizzle out. But it’s heading for a region with $12 bln of daily output and could cripple finance’s capital at a time when investors are already jumpy.
Bernanke’s inaction, even if temporary, is welcome 30 Aug 2011 Stock investors may have been briefly underwhelmed, but the Fed chairman was right not to promise new easing in his Jackson Hole speech. Aside from its likely ineffectiveness, he faces dissent at the Fed. That’ll make the now extended September meeting a new focus for markets.
Temasek’s smart CCB trade may have strategic costs 30 Aug 2011 Singapore’s state investment fund is buying shares in China Construction Bank from Bank of America - at a valuation 21 pct below where it dumped the stock last month. That has financial logic. But it may look too clever for Beijing, and hurt Temasek’s access to deals in China.
Apple wouldn’t be first to weather succession 26 Aug 2011 IBM, Wal-Mart and General Motors show how an obsessive focus on design, customer needs and tight control over supply chains can be ingrained in a company by a visionary creator. But these examples also provide some warning signals about how the post-Steve Jobs era could go wrong.
Demand Media takes cake with galling stock buyback 26 Aug 2011 The content farm’s shares have halved since Goldman and Morgan Stanley took it public in January. Now it’s spending a third of the cash it raised to repurchase stock. That contravenes the promised use of proceeds in its prospectus - and does nothing to fix its damaged business.
Goldman chips away at fixed cost problem 26 Aug 2011 The bank is trimming base pay for some senior UK bankers. The 2009 shift from bonuses to higher fixed comp was a bit slippery, but the move back rightly reinstates pre-crisis flexibility. Rivals should follow but may struggle unless they, too, foresaw the need in the small print.
Buffett’s $5 bln endorsement won’t end BofA’s woes 26 Aug 2011 Winning the Sage of Omaha’s backing is a coup for CEO Brian Moynihan - and the terms aren’t painful. But the deal offers no fix to BofA’s mortgage black hole nor does it immediately boost common capital. Those concerns may prove to be more enduring than Buffett’s thumbs up.
Bloomberg LP spares no expense on first big deal 25 Aug 2011 The New York mayor’s financial information company is paying $1 bln for legal publisher BNA. At 36 times earnings, no public company could reasonably compete. But the price also reflects Bloomberg’s ardor to expand its influence and build a cushion against Wall Street.
Now investors can focus on just how good Apple is 25 Aug 2011 No CEO is as indelibly linked to a company as Steve Jobs. But his unfortunate health issues have been a distraction for yearsll-seeded orchard. Handing over day-to-day operations is still a blow. After the initial shock, though, investors should see more clearly the powerhouse Jobs built.