Companies & Funds

New Yahoo CEO challenge: to dismantle the beast

7 Sep 2011

Fixing the $16 bln Internet firm is proving tough thanks to its many dysfunctions. Firing Carol Bartz looks a step forward, even if the hapless board did so in characteristically shambolic fashion. A breakup is probably needed, but may be hard with the founders calling the shots.

Moynihan edges toward control – and responsibility

7 Sep 2011

The BofA boss didn’t just inherit Ken Lewis’s mess but also his people. Ousting Sallie Krawcheck and Joe Price to consolidate power partly addresses this. His predecessor’s failings aren’t his fault, but Brian Moynihan will now be more squarely on the hook if he can’t fix them.

James Murdoch stuck in limbo

6 Sep 2011

Serious questions still dog the News Corp exec after the latest UK parliamentary hearings into phone hacking. But challenges from two of his former staff lack decisive proof. Murdoch’s articulate and sure manner, and the fact he’s up second, give him an advantage.

Narrow self interest is equity vigilantism’s flaw

2 Sep 2011

Bond investors have history when it comes to intimidation. To judge by recent performance, their strong-arm tactics can pay off, too. But while it may look tempting, and shareholders must fight hard, the vigilante approach is misplaced.

China small-stock boom puts big banks in the cold

2 Sep 2011

The likes of CICC and Goldman Sachs have dropped off China’s IPO league tables. A shift to second-tier stock markets favours nimbler and smaller underwriters. With Shenzhen’s boards raising twice what the main Shanghai exchange did this year, the big guys must adjust.

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.

BP needs to make unhappy TNK-BP marriage work

1 Sep 2011

There’s no easy way out of BP’s self-created mess in Russia. The oil group may be tempted to stop working with its difficult oligarch partners at TNK-BP. But a divorce would be difficult and costly. BP may be better off making the best of this troubled, yet lucrative, marriage.

Gold miners no longer leveraged play on the metal

1 Sep 2011

The yellow metal’s price is up 29 pct in 2011, but mining shares are flat. Australia and Peru recently showed how governments grab more when prices rise; costs go up with prices, too. With mining investors also discounting price spikes, the shares aren’t shining for gold bugs.

IMF looks less wrong than Europe on bank capital

1 Sep 2011

The global fund has enraged euro zone politicians with draft findings showing a 200 bln euro hit for European banks from sovereign debt. True, the IMF’s methodology may be too conservative. But compared to the inadequate EU stress tests, the findings are probably more reliable.

Underwriters’ caution weakens Greek bank deal

1 Sep 2011

Investment banks are hesitating about underwriting Alpha and Eurobank’s 1.25 bln euro capital hike. The share issue carries unusual risks given the difficulties facing Greece and its lenders. But if the experts are struggling to price the risk, other investors won’t be inspired.

Shadow banking in China needs restraint

1 Sep 2011

Banks in China may be lending hand over fist, but they’re not alone. Companies, ill-understood trusts and even individuals have pushed credit growth to more than double Beijing’s official target. Reining in this lending will be painful but it would be worse to let it run riot.

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.

South Korean equities offer bargains for optimists

30 Aug 2011

Its stocks dived 21 percent this month as leveraged bets soured. Now they look cheap. Big names such as Samsung Electronics trade below 10 times projected earnings. High debt will keep things volatile, but investors sanguine about global growth may want to revisit Seoul.

Market crash compounds Russia’s lack of appeal

30 Aug 2011

Russia’s stock market has been one of the biggest casualties of the global turmoil, again illustrating its extreme sensitivity to risk. Although investors should be poised for an eventual rebound, the latest crash underscores the diminishing allure of Russian stocks. 

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.

EU bank stress tests look soft on funding

26 Aug 2011

The European Banking Authority’s stress test of bank solvency last month included various assumptions about funding costs in adverse markets. But judging by the wholesale rates implied by current bank CDS levels, the EBA test may not have been bearish enough.

Take Chinese bank earnings with a pinch of salt

26 Aug 2011

Bad loans are falling, capital buffers look healthy and earnings are shooting ahead - so why have China’s bank valuations fallen so far? Look deeper and there are signs that a slowing economy is hurting, potential problems lurk off the books, and small banks are struggling.

Abu Dhabi’s Aabar sticks out for the wrong reasons

25 Aug 2011

The state-owned investor has carried on spending as others have been told to cut back. But multi-billion dollar bets on Glencore and Malaysia’s RHB are under water. Aabar’s turn of fortune underscores the fund’s lack of a focused strategy.