United States of America

Crop of shock CEO exits reinforces need to plan

25 Oct 2011

Judging by First Solar’s 25 pct stock price drop, you’d think it erred in ousting its chief. Or that Quest’s 11 pct jump meant it should’ve dumped its boss sooner. And no reaction must make IBM’s new CEO a snooze. The real lesson is that boards must carefully plan successions.

Amazon keeps digging costly moat around business

25 Oct 2011

The Internet retailer shocked Wall Street with low profitability due to heavy investment. This expenditure may eventually pay off - that’s why the stock trades at 100 times estimated earnings. But it’s a timely warning that even Amazon must keep girding the barriers to entry.

ArcelorMittal chickens out to hoard its cash

25 Oct 2011

The world’s largest steelmaker abruptly bailed on a joint takeover of Australia’s Macarthur Coal, selling out to partner Peabody, as investors tendered their shares with unexpected alacrity. It may be a sensible move, but it certainly makes the billionaire Mittals look a nervy bunch.

Sprint’s antitrust pitch hedges against DoJ miss

25 Oct 2011

The third-largest U.S. mobile operator says it just wants to help Justice kill AT&T’s takeover of T-Mobile USA. But its separate lawsuit suggests unease with Uncle Sam’s arguments. Such private cases rarely succeed. But this one looks like insurance against a government stumble.

Rick Perry’s simple tax plan spoiled by complexity

25 Oct 2011

The Republican presidential contender’s 20 pct flat tax is a sensible plan with some nice new features and structured to avoid being too regressive. But the capital gains exemption is a silly loophole and making it optional wrecks Uncle Sam’s yield. It’s a missed opportunity.

Rupert Murdoch’s sham governance on full display

25 Oct 2011

A majority of stockholders who don’t share the media mogul’s last name snubbed his sons, James and Lachlan, along with three other News Corp directors. The emphatic vote may be only symbolic. But even a board so entrenched as this one can’t ignore the angry mob.

Pfizer milk bid could fortify China’s M&A hopes

25 Oct 2011

Mengniu Dairy’s bid for the U.S. pharma giant’s $10 bln nutrition unit would make strategic sense. China can gain from deals pegged on rising consumer demand rather than cheap labour. Buying foreign brands may also help address food safety problems, if bidders tread carefully.

Netflix’s melting core spells value disaster

25 Oct 2011

Up till now, the company has been cagey about the respective profitability of the two units it was planning to separate. New figures show Netflix makes about 10 times more from a DVD customer than an online streaming subscriber. Trouble is, the wrong arm is shrinking - and fast.

Icahn’s American truck merger pitch has wheels

24 Oct 2011

The billionaire investor often has loopy ideas for M&A among his holdings (remember Lions Gate-MGM?) But a $5 bln-plus combination of Navistar and Oshkosh makes some strategic sense. The net present value of cost synergies could be worth more than their combined market cap.

Apax misses with HIT disposal

24 Oct 2011

The private equity firm’s ownership of HIT Entertainment, the company behind kids’ character Bob the Builder, makes for sad reading. Mattel may enjoy the $680 million company more. But fixing Bob up with Barbie does not necessarily mean they’ll live happily ever after.

Hungry watchdog could curb websites’ data appetite

24 Oct 2011

Suits accuse Facebook and others of violating privacy with “cookies” tracking users online. But reluctant judges and dusty statutes mean the cases are toast. The better recipe is to require clearer consent before a poke into people’s lives. That’s a task for regulators to tackle.

Banks say sorry for crisis

24 Oct 2011

At least, they do in this imaginary letter to G20 leaders. They also promise no bonuses for top executives for two years or more. It’s part of an attempt to repair relations with an enraged public and prevent the anti-banker backlash from sweeping away what’s good in capitalism.

U.S. housing policy tilts further to richest 1 pct

21 Oct 2011

Legislators seem hell-bent on defending the millionaire property market. Raising the limit on government-backed loans and giving home-linked visas to rich foreigners won’t help the worst-hit low end. Tea Partiers and OWS protesters can find common cause in opposing these turkeys.

Celluloid hopes mean more to Tesla than earnings

21 Oct 2011

The $2.8 bln firm makes pure electric cars, but it’s valued as a hybrid. Sure, quarterly numbers hint at its ability to hit manufacturing targets. But Silicon Valley-style growth is central to the story. Tesla will be hoping a new documentary helps electric cars catch on.

Groupon’s "first mover advantage" probably isn’t

21 Oct 2011

Burning huge sums of cash to get ahead of rivals can work - look at Amazon. Groupon thinks a bit more capital can cement its position atop the Internet coupon heap. But this strategy works when it creates costly barriers to entry - which Groupon shows little evidence of doing.

China best to keep cool head over yuan bill

21 Oct 2011

Beijing has hit out over a mooted U.S. currency bill that could lead to tariffs. China is getting more assertive, and can no longer rely on U.S. firms to fight its corner. But starting a war of words may alienate its remaining supporters, and make the bill more likely to pass.

Greenhill scrapes itself from bottom of the barrel

20 Oct 2011

Until unveiling bumper Q3 results, the advisory firm boasted Wall Street’s worst performing stock - even BofA fared better. After staff losses elicited a panic, a change was welcome. Challenges remain, but with M&A share solid and CEO Bok sounding upbeat, the worst may be over.

Cisco stops descent, stuck in purgatory for now

20 Oct 2011

After years of chasing growth - and seeing its stock crumble - the company is now focusing on profit. This should buy CEO John Chambers enough time from investors to retire gracefully. But outsized gains for shareholders look elusive, if rival big tech valuations are any guide.

Citi’s CDO payout is ripe for the Rakoff treatment

19 Oct 2011

The bank’s $285 mln settlement with the SEC is about half what Goldman paid on Abacus. And yet Citi allegedly picked the assets in the CDO itself while keeping buyers in the dark. Judge Jed upbraided the watchdog for its light touch on BofA. This case warrants a similar hearing.

Closed-door justice will leave dealmakers in dark

19 Oct 2011

A spat between Skyworks and takeover target Advanced Analogic will play out in private instead of open court under Delaware’s new arbitration system. That may save the parties time and money. But it cheats the M&A world - and investors - of valuable legal guidance.