United States of America

Michael Kors IPO cut from same cloth as Prada’s

6 Dec 2011

The U.S. designer’s eponymous firm is seeking a luxury price tag of up to $3.6 bln in a New York float. It’s an all-American fashion name and the high-end valuation isn’t out of line with Prada’s Hong Kong listing this year. But Kors may struggle to keep up the pace of growth.

Pharma center of gravity shifts eastward

6 Dec 2011

Drug research tends to follow spending. Take Merck’s pledge to invest $1.5 bln in R&D in China. Emerging economies’ citizens are growing wealthier and living longer, while their governments’ fiscal health is robust. Merck’s step suggests drug development is shifting accordingly.

Oracle needs to read Cisco cautionary tale

5 Dec 2011

Empires built on acquisitions can run into problems as they sprawl. That’s doubly so in tech, where obsolescence is a risk. Oracle has used database profits to buy new businesses. So far, so good - but Cisco’s record suggests success will be hard to sustain.

Courts more willing to second-guess Wall Street

5 Dec 2011

U.S. judges have typically trodden softly over financial disputes and settlements for fear of ruffling markets. But the rejection of the SEC-Citi CDO deal is the latest sign times are changing. Activist courts aren’t good for certainty, but they’re filling a gap left by Congress.

SAP pays $3.4bln to ride rise of "cloud" computing

5 Dec 2011

The German software giant is swallowing a fast-growing yet barely profitable upstart, Successfactors. The price is a lofty 8 times sales but SAP needed a deal. It risked missing out on a huge shift by corporate clients to cloud-based technology applications.

New England power merger deserves final nixing

5 Dec 2011

A report on Northeast Utilities’ handling of a snowstorm from a former U.S. disaster official makes it clear: the company failed in the duties that come with its monopoly. Regulators have all the evidence they need to power down the utility’s $4.7 bln takeover of rival NSTAR.

U.S. jobs picture brightens, but not for all

2 Dec 2011

Job creation is getting stronger. And the sharp drop in the unemployment rate to 8.6 pct will please Obama. But it conceals a bifurcation: those without jobs are either getting them or giving up. The danger is that worker shortages arise quickly and social problems proliferate.

Delay takes shine off Zynga’s IPO

2 Dec 2011

Revenue at the maker of FarmVille and other Internet games is still rising fast. But on more telling measures, growth has slowed. Zynga’s hoped-for $9 bln valuation isn’t too far-fetched. But the price tag might have been even higher had it harvested IPO investors’ cash earlier.

Prosecutors corrupt effective anti-corruption law

2 Dec 2011

A U.S. judge just overturned the first court win against a company under the Foreign Corrupt Practices Act, ruling the government fudged evidence. It’s an extreme case of prosecutors stretching to nail firms for bribery. But it further threatens a useful law already under attack.

How GM’s Akerson can show off some Mulally mojo

1 Dec 2011

Bankruptcy gifted GM a better balance sheet and CEO Dan Akerson is revving up sales. But he still needs to fix Opel, further overhaul operations and truly bury the stodgy old GM before he can convince investors he’s capable of the turnaround Ford’s Alan Mulally has achieved.

Big U.S. foreclosure settlement isn’t dead yet

1 Dec 2011

It sounds like the start of a Monty Python riff but also suits the Massachusetts lawsuit against major banks. Though it might seem to end a unified front by the states, it hasn’t really torpedoed their joint efforts. In fact, the suit could breathe new life into negotiations.

Pharma stocks no safe haven in austerity storm

1 Dec 2011

Drug shares have traditionally weathered economic storms well. Yet today the sector trades at a 20 pct discount to the market. With budget cuts the medicine of choice for solving government deficits, investors are rightly anticipating further knocks. The sector is best avoided.

Buffett steals page from odd playbook: Murdoch’s

30 Nov 2011

The Berkshire Hathaway boss is buying his local newspaper publisher, defying his own investment advice. The Sage of Omaha can’t need more influence in his own backyard. But like other fogeys including Rupert Murdoch, he can’t shake a soft spot for print and its enduring clout.

Governments are now world’s financial engineers

30 Nov 2011

The crisis exposed the trouble with complex leverage games in the private sector. But Western authorities, undoubtedly abetted by bankers, have embraced high finance for everything from housing to Europe’s rescue fund. Such finagling, however, is harder in tough markets.

Bagehot to cenbanks: liquidity needn’t be cheap

30 Nov 2011

The 19th-century British financier believed in lending freely during crises but at high rates. Wednesday’s coordinated action by the ECB, the Fed et al boosted liquidity and reduced its cost. That could worsen imbalances. A Bagehotian approach would be workable and less risky.

Central banks take on market fears

30 Nov 2011

A six-nation coordinated move to make cheaper dollars available globally seems aimed initially at European banks. Like it or not, it shows a willingness to do what private investors won’t. If politicians show similar unity, they could win the standoff with markets over the euro.

P&G may need to pop a plan B for Pringles

29 Nov 2011

Diamond Foods, agreed buyer of the consumer giant’s chips brand, keeps losing sparkle. Buried news about its internal audit investigation, rising payments to walnut-growing directors and other inconsistencies don’t seem to augur well for the probe - or P&G’s deal.

Usual suspects finally drag down American Airlines

29 Nov 2011

Parent company AMR was the only big U.S. airline to avoid bankruptcy - until now. Rivals had already scrubbed out the worst of their handicaps. Now American gets its chance to cut its labor costs and debt load and fight again despite high fuel costs and ruinous competition.

Mayhew’s JPMorgan Caz legacy hard to sustain

29 Nov 2011

The veteran banker is retiring as chairman after four decades with the UK broker. The deal he engineered with JPMorgan is a rare success, with the U.S. bank’s balance sheet complementing Caz’s relationships. Maintaining the trust he engendered while flogging services will be tough.

Bounced Citi CDO payout tests SEC’s credibility

28 Nov 2011

Judge Jed Rakoff isn’t convinced Citi’s $285 mln deal with the U.S. regulator serves the public interest. The watchdog can only blame itself. With few exceptions, lax enforcement has earned it a toothless reputation. Going to trial gives the SEC a chance to prove it has bite.