Consumer Products and Services

Capital Calls: Disney’s Netflix problem

8 Nov 2022

Concise views on global finance: The Magic Kingdom’s shares tanked on Tuesday after it reported widening losses in its streaming service division, but it can overcome the challenges.

IPhone plant woes are least of Apple’s problems

7 Nov 2022

The supplier of the $2.2 trillion tech giant’s devices, Foxconn, may lose up to 30% of production from a key facility following a Covid outbreak. That sounds bad, but it may only hit 1% of revenue. Waning demand and a slower transition to services affects Apple more.

Tesla success is less fleeting than AV upcharge

7 Nov 2022

Boss Elon Musk charges $15,000 a car for self-driving tech that doesn’t yet work. Ford wants to do that too, even as it ditches plans for robotaxis. Like power steering, fees for hands-free driving may disappear. Good chance Musk’s technology innovates before competitors.

Philip Morris and Rio’s poker faces need some work

7 Nov 2022

The $139 bln Marlboro maker and $95 bln miner have upped buyout offers to try and clinch strategically key deals. In both cases, hedge funds and minority investors called their bluff. The lesson is that bidders can’t play hardball if everybody knows they really need a deal.

Capital Calls: Starbucks waits stubbornly in China

4 Nov 2022

Concise views on global finance: The $100 billion coffee chain surprised investors with a solid quarter despite persistent sluggish results in the People’s Republic.

Slim-chance grocer lawsuit is real problem for M&A

4 Nov 2022

Washington attorneys won a temporary setback for grocer Albertsons on a $25 bln sale to Kroger. Arguments over a special dividend look stretched. Still, state meddling in deals is unusual. This opening salvo is one part of an expanding toolkit competition hawks will start to use.

Abrdn’s battered model may yet start to shine

4 Nov 2022

The British group meshes staid fund management with technology platforms for savers and wealth managers. The latter are growing and benefitting from higher interest rates. CEO Stephen Bird’s turnaround has a long way to go, but an undemanding valuation leaves plenty of upside.

King Icahn’s Crown stake invites regular activism

3 Nov 2022

The activist has an 8.5% stake in the drinks-packaging firm, which had a tough last quarter that caught its CEO off guard. A campaign at Crown is different than his recent one at McDonald’s – it has real financial teeth. Plus preying on management mistakes gave Icahn his throne.

For your consideration: Warner-Discovery part two

3 Nov 2022

Since the companies behind “House of the Dragon” and Shark Week merged, it has trimmed its outlook, written down Batgirl and Elmo content, and lost nearly half its market value. For boss David Zaslav, big may not be big enough. A deal with Paramount or NBC would be worth a look.

UK tech flops expose perils of IPO forecasts

2 Nov 2022

E-commerce group Made.com has all but collapsed little more than a year after issuing sunny targets in an 800 mln pound float. Stock market duds Deliveroo and Funding Circle had optimistic guidance. When initial public offerings restart, investors should ignore the projections.

Capital Calls: DuPont, Dollar stores, Twitter

2 Nov 2022

Concise views on global finance: The chemicals company takes an unexpected but welcome M&A break; Dollar General is being sued for practices that raise questions about pricing power; and Elon Musk plans to charge micro-bloggers for blue checks to help cover his huge deal costs.

Exxon and Apple are in a similar boat

28 Oct 2022

Exxon’s quarterly profit was its largest ever, at $20 bln, and nearly as high as Apple's. But the oil giant, once the world's most valuable firm, is worth a fifth of Apple. Newfound respect for earnings, and the recognition that beliefs are fleeting, could partly close the gap.

It’s hard to squeeze pet food out of Colgate tube

28 Oct 2022

Pushy investor Dan Loeb makes a valid point that the toothpaste maker’s Hill’s division would be worth more as a stand-alone company. Breakingviews’ calculations suggest a potential 16% uplift in value. There also would be some adverse effects, however, which undermine the case.

Apple isn’t safe when neighborhood is aflame

27 Oct 2022

The iPhone maker’s steady growth and policy of returning cash looks far more attractive than cyclical and splurging peers like Meta Platforms. Yet a rising dollar and declining consumer demand are making Apple’s valuation far less attractive than it used to be.

Adidas’s Kanye West bet is still in credit

27 Oct 2022

The 18 bln euro sportswear maker severed ties with the musician over offensive comments. In this Viewsroom podcast, Breakingviews columnists discuss how the financial benefits to Adidas nevertheless outweighed the costs. That may spur other brands to pursue outspoken stars.

Energy crisis gives beermakers a lasting hangover

26 Oct 2022

Heineken’s shares fell 10% after reporting weaker-than-expected sales. Inflation is eroding punters’ disposable income, making it harder for brewers to raise prices like in previous crises. Soaring costs for fuel and wheat, which bite next year, pose a further threat to margins.

Alphabet properly preps its books for a downturn

25 Oct 2022

The company’s quarterly revenue growth slowed to 6%, the worst performance since the pandemic. But compared to rivals, the $1.3 trln giant taps a variety of sources for ad dollars and has been comparably conservative with hires. A looming downturn will be a little less painful.

Capital Calls: Adidas

21 Oct 2022

Concise views on global finance: The 19 bln euro sportswear maker slashed its 2022 revenue outlook, dragging shares down 10%.

Tesla’s Apple-sized goals have cash risks

19 Oct 2022

The electric-vehicle leader’s growth keeps it on track to have iPhone-like dominance of its industry. That could justify its $700 bln valuation, unless worrying signs that demand might be flagging transpire. In that context, returning cash to shareholders is a bad idea.

P&G’s pricing power hangs by a floss

19 Oct 2022

The $300 bln maker of Pampers and Puffs charged more in the latest quarter without scaring off too many customers. It’s a good sign, but some of its brands are weaker and costs are rising at a faster pace. As a lens into the global consumer, the results are cause for concern.