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.
Morgan Stanley makes best of turbulent time 19 Oct 2011 The bank’s $100 mln Q3 profit after accounting funnies might not look like much. But it beats Goldman. Also, Morgan Stanley’s traders outperformed rivals, the brokerage held its own and more details on European risks should calm nerves. CEO Gorman’s plan may be starting to gel.
Inflation may join jobs in 2012 presidential race 19 Oct 2011 On its own, a 3.9 pct annual rise in U.S. CPI won’t raise big inflation fears. But M2 data suggests price rises will accelerate further. If so, by next summer CPI increases could potentially hit red-zone levels. That would inject inflation, and Fed policy, into the electoral mix.
Abbott prescribes a dose of financial engineering 19 Oct 2011 The runaway success of blockbuster drug Humira has been a mixed blessing. It larded the healthcare group’s attractive nutrition and generic drug businesses with a pedestrian Big Pharma multiple. Splitting off its research drug arm should rectify the valuation mismatch.