Conglomerates

GE’s carve-up efforts remain half-hearted

20 Jul 2012

The $210 bln conglomerate is hacking its energy arm into three after doing the same with another division in 2010. Cost savings would be worth only some $300 mln. Maybe CEO Jeff Immelt, who has presided over a halving of GE’s share value, will warm to a breakup on a bigger scale.

Replacing P&G boss may be Bill Ackman’s best hope

13 Jul 2012

The uppity investor’s latest target is the Pampers-to-Crest giant. But traditional activist tactics like a breakup won’t work at the $178 bln company. New leadership might help get P&G back on track. Maybe Ackman could even recruit vaunted former CEO A.G. Lafley to help.

Warren Buffett embraces the 100 pct strategy

12 Jun 2012

Berkshire Hathaway’s bid for bankrupt ResCap is a bet of sorts on a rebound for U.S. housing and the ailing 99 pct. Buffett is also long the 1 pct, spending $10 bln on luxury jets. And the record bid for his charity auction lunch is a fresh sign he can bridge the two groups.

GE Capital cash cow reincarnated as goat

16 May 2012

General Electric is finally milking its finance unit after stopping dividends in 2009. But GE Capital is slimmer now and, special dividends aside, will also be passing on less of its earnings than in the past. It’s still good, just not as rewarding for its parent as it once was.

Buffett Rule divides Berkshire Hathaway faithful

6 May 2012

Ideological squabbling marred the annual Omaha love-fest this year. Ice-cream bars and newspaper tosses weren’t enough to distract shareholders angry about the politically charged tax plan with Warren Buffett’s name on it. It may even be an unplanned liability to Berkshire.

GE offers Citi starting point for fixing CEO pay

20 Apr 2012

Investors voted against Vikram Pandit’s comp largely due to his wooly incentive plan. Facing similar discontent last year, GE added decent hurdles to better align boss Jeff Immelt’s pay to the conglomerate’s performance and shareholder returns. Citi should go a step further.

Brazilian billionaire buys time from Gulf

26 Mar 2012

Eike Batista may be the richest man in Latin America’s biggest economy, but he runs a cash-hungry empire. His sprawling oil and mining group is in its infancy. The $2 bln infusion of patient Abu Dhabi money should help Batista try to make good on his promise.

Congratulations Google, you’re now a conglomerate

15 Feb 2012

U.S. and EU antitrust authorities have cleared the search firm’s $12.5 bln purchase of Motorola. Its hardware foray might open new markets - or be a vital means of defending its advertising business. But on Wall Street, diversification like this merits a valuation discount.

Thermostat spat puts old heat on new cool

9 Feb 2012

Honeywell says Nest Labs stole its ideas, though some seem obvious. True or not, the upstart outdid the old-line firm with a temperature controller of Apple-like elegance. When new companies produce something better, older ones should flex competitive muscles before legal ones.

Multinationals tell real China growth story

8 Feb 2012

Earnings of companies like Yum Brands, Siemens and LVMH say what China’s official data often doesn’t. Consumer brands show inflation is still a concern. Industrial firms tell of rapidly slowing investment. As for luxury firms, their success shows the rich are doing just fine.

GE gives the world a healthy reality check

20 Jan 2012

Four years ago, General Electric shocked investors with a profit warning foreshadowing calamity ahead. Today the conglomerate merely missed revenue estimates by 5 pct. Shareholders may not like that, but as a bellwether for the global economy the results should be reassuring.

Thomson finally completes takeover of Reuters

2 Dec 2011

Tom Glocer’s bankerly CEO skills no longer suit the publishing giant. He restructured Reuters and deftly engineered its well-timed sale. But the company needs to grow – and the controlling Thomson family is weary of waiting. How it does so, though, still seems far from clear.

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.

Tata keeps things in the family

23 Nov 2011

Cyrus Mistry’s appointment as Ratan Tata’s successor continues the habit of dynastic succession in Indian companies. That may not be such a bad thing. But Mistry can promote outside talent by stepping back from the chairmanships of Tata Steel and Tata Motors.

Thomson at last sees fit to merge with Reuters

28 Sep 2011

Three years after uniting, the onetime rivals are forcing the professional and financial publishing arms together. The acquired Reuters side retained a certain clout in 2008, but has struggled since. The Thomson family now seems to be reasserting control to make the deal work.

Berkshire buyback a move best left to Buffett

26 Sep 2011

The Sage’s conglomerate has taken the highly unusual step of repurchasing shares, at up to a 10 percent premium over book value. It doesn’t mean it’s a strategy to be followed, though. If shares of other companies were truly undervalued, Berkshire probably wouldn’t be buying its own.

Tyco sets new example for conglomerate bondholders

19 Sep 2011

When the industrial group last broke into three in 2007, an ugly fight with creditors ensued. This time, Tyco’s paying them more heed. It plans to spread $4 bln of debt evenly rather than dump it into one unit. Lenders to other breakup candidates may want to gird themselves.

GE payback of Buffett reflects climb from crisis

13 Sep 2011

Like clockwork, the industrial giant notified the Sage of Omaha on Tuesday of its intention to buy back the $3 bln of preferred stock he bought at the height of the 2008 panic. Amid widespread market pessimism, it’s a reminder of how much stronger GE and the system have become.