Conglomerates

Eike Batista gives human face to boastful Brazil

10 Jul 2013

The implosion of the tycoon’s empire sadly validates the sour joke that Brazil is the nation of the future - and always will be. Batista’s vow to become the world’s richest man looks as dubious as ex-President Lula’s promise of 30 years’ growth. Brazil deserves a hot-air discount.

Third time lucky looks a stretch for Eike Batista

1 Jul 2013

The Brazilian billionaire’s EBX group may soon crash. He bounced back from financial disaster before. But now he’s wiped out $50 bln of value in three years after borrowing oodles to expand quickly. Investors share some blame. But now they’ll surely be too wary of Batista.

Buffett needs luck for Las Vegas gamble to pay off

30 May 2013

Berkshire Hathaway’s $5.6 bln bet on NV Energy suggests billionaire investor Warren Buffett is coming up short on decent ways to deploy his cash. With utility mergers offering meager synergies thanks to regulators, Berkshire will struggle to cover its cost of capital.

GE Capital chief exit puts spotlight on Immelt

30 May 2013

Michael Neal may be leaving after eight years running the erstwhile high-flying lending unit. He got GE Capital back in shape after the financial crisis, but it’s no longer the company’s key division. Neal’s departure raises the question of who will succeed GE boss Jeff Immelt.

Deals and buybacks portend cheerier Buffett powwow

2 May 2013

Last year’s Omaha gathering soured over a tepid share price and controversial tax plan. But Berkshire’s recent acquisitions and stock repurchases should brighten the mood this weekend. Shares are on the rebound, giving followers of the newly tweeting Oracle reason to boast.

GE shareholders close gusher on bolt-on oil deals

8 Apr 2013

Their reaction to its $3 bln Lufkin swoop is more realistic than the wowed reception an earlier acquisition got. Lufkin’s a strong player in a growing sector. But previous deals did little for margins and the latest carries a 38 pct premium. Tempering the optimism looks fair.

Goldman and Buffett scratch each other’s backs

26 Mar 2013

They’re amending the terms of warrants used in a 2008 rescue investment of the bank. Buffett gets his profit without having to stump up $5 bln in cash. Goldman minimizes dilution, which helps its return on equity - while also easing stock buyback negotiations with the Fed.

$5 bln of delayed gratification better than none

27 Nov 2012

Boardroom egos often hamper deals that can benefit investors. Ralcorp flipped suitor ConAgra the bird a year ago. With the formerly reluctant chairman running a spin-off, the food producer is now selling at a price it could have negotiated before. At least it got a second chance.

GM’s ex-lender closer to repaying U.S. – on paper

5 Nov 2012

GM and Ally owe taxpayers $42 bln. GM is profitable but trades way below break-even. Ally’s combination of a solid core business, asset sales and reduced mortgage risk values it above what it owes. But only an outright sale would recoup taxpayer aid fast. That looks remote.

Eike Batista adds bottom feeding to tangled web

1 Aug 2012

The Brazilian billionaire is taking his logistics arm LLX private after the share price halved in a year. Investors may rue getting on board with Batista, but delays, losses, missed targets and a slowing economy swamping his complex conglomerate make it a good time to jump ship.

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.