Companies & Funds

Groupon’s odds of success may wilt with market

10 Aug 2011

The online coupon company’s Q2 sales increased 10-fold from a year ago. Yet its net loss also swelled to over $100 mln as it financed growth with cash owed to merchants. If investors shunning risk close the window for an IPO, it would leave Groupon less financial wiggle room.

Financials investors brace for the worst

9 Aug 2011

They wiped $100 bln off the 20 largest U.S. institutions on Monday. It may be panic selling. But most big banks are back below book value. Shareholders might not believe a 2008-like crash is coming, but the rout suggests they’d rather get out first and ask questions later.

Cheaper oil may be last best stimulus

9 Aug 2011

Falling crude prices are the silver lining to market woes. While governments lack economic ammo, one estimate says each cent off gas adds $1 bln to US pockets alone. OPEC is unlikely to intervene any time soon, meaning lower fuel costs could be the only economic booster for now.

Why Apple just might be the first $1 trln company

9 Aug 2011

The iPhone maker’s sales have been surging 80 pct a year, and profit faster. While its $342 bln value overtook Exxon’s briefly, it trades on par with the sluggish market - and at half the multiple it fetched in 2006. Relatively, at least, Apple looks worth far more.

Asian equity sell-off reflects three flavours of fear

9 Aug 2011

While the region’s economies are in good shape, investors fear the impact of a U.S. recession - both on exports, which remain key to growth, and on closely linked capital markets. A third worry is that plunging asset prices could cause a real pullback in credit and investment.

BofA leads banks back into mortgage abyss

8 Aug 2011

Its shares fell 15 pct after the U.S. debt downgrade and AIG’s $10 bln home-loan lawsuit. Other mortgage-heavy banks were hit, but none as bad as BofA. Investors now reckon it’s worth $135 bln less than breakup value. That’s a huge housing hole for CEO Brian Moynihan to escape.

Don’t blame S&P for the madness of markets

8 Aug 2011

The credit rating agency targeted U.S. debt, but it was stocks not Treasuries that got clobbered. The counterintuitive reaction is less bonkers than it seems. An economic slowdown combined with dithering leaders and limited central bank resources is a bad mix for risky assets.

Buffett’s value quest pushes a board to seek same

8 Aug 2011

A $3.2 bln offer from a Berkshire Hathaway unit prices reinsurer Transatlantic at just 80 pct of book value. But along with a hostile bid from Validus, the target’s directors are now under pressure to do what they should have done before - find the best deal for shareholders.

Different duty may call for U.S. Treasury boss

8 Aug 2011

There was little upside for the president to let Tim Geithner go back to New York. Finding a replacement would be a political pain. And with markets nervous, Obama needs someone with crisis experience. But Geithner may have a smaller role in this latest stage of the crisis.

Global equity sell-off ignores fundamental value

8 Aug 2011

Stocks have been clobbered by the latest leg of the global economic and financial crisis. But falling share prices are a symptom of fears: they are not, as yet, a cause. Long-term investors unburdened by leverage still have good reasons to hold their nerve.

Logical Kraft slim-down aims to fatten world

4 Aug 2011

The Oreos-to-Cheez Whiz conglomerate is splitting into a growth-challenged American grocery business with $16 bln of sales and an oddly named $32 bln “global snacking platform.” This defies the scale case for last year’s purchase of Cadbury, but it makes sense for shareholders.

Investors in Motown see nothing but recession

4 Aug 2011

GM posted its best earnings in years and Ford’s looking solid even with subdued U.S. sales. Both are sitting on piles of cash. Yet shareholders have wiped a combined $49 bln off their value since January amid economic worries. They’re right to be cautious. But it looks overdone.

Lloyds’ battering may have silver lining

4 Aug 2011

Huge one-off charges, higher funding costs and moribund markets made a mess of the UK lender’s first half. But Lloyds is weaning itself off state funding. And its depressed share price may prompt politicians to back away from plans to force the bank to sell more branches.

Rio shareholders get an extra thank you

4 Aug 2011

The miner needed a $15 bln cash call in the crisis. Now it’s raised its share buyback target by $2 bln to $7 bln. Given slightly disappointing H1 numbers and a global slowdown, that may seem imprudent. But the numbers add up. Rio can afford to repay investors their 2009 favour.

StanChart investors should not get carried away

3 Aug 2011

The lender’s income is growing at a double-digit clip and it is hiring, not firing. Even better, costs are under control. But StanChart’s premium valuation leaves little room for error. A first-half hiccup in India is a reminder that emerging market growth is seldom linear.

SocGen back to earth with profit warning shocker

3 Aug 2011

The French bank has admitted it probably won’t make its optimistic 6 bln euro net profit target next year. This may reflect slowing revenue rather than its exposure to euro zone contagion. But with markets already jittery, the warning could hardly have come at a worse time.

Petrobras’ bargain barrels pricier than they look

3 Aug 2011

The boss of the $210 bln Brazilian energy giant reckons its shares are the cheapest way to bet on oil. With production growth expected to leave multinational rivals in the dust, Petrobras shares might seem low-priced. But Brasilia’s grip on the firm justifies a big discount.

Voting equality could bring big payoff for Murdoch

3 Aug 2011

Change is needed at News Corp. Scrapping the dual share structure would signal a fresh start and could create a big slug of value. Reform could also reward the Murdochs handsomely for ceding control. A rejig would dilute today’s non-voters, but even they might end up ahead.

Italy draws banks into dangerous embrace

3 Aug 2011

As investors shy away from sovereign debt, Italy will rely on banks and insurers to help it through the turmoil. The country’s lenders are well-funded and can always borrow more from the European Central Bank. But until Rome restores confidence, banks will only get weaker.

Corzine covenant smacks more of PR than protection

3 Aug 2011

Bondholder activism is a good thing. But investors in MF Global’s $300 mln offering have only $3 mln a year to gain and little to obviously lose if the former Goldman Sachs boss and New Jersey governor heads to Washington. This key-man clause benefits Corzine more than creditors.