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Debt triangles return to haunt Chinese firms

2 Nov 2011

Despite robust sales and earnings, Chinese companies’ operating cash flow deteriorated sharply in the first half - suggesting many have increased credit to customers. If they can’t pay, a wave of ugly bad debt could hit companies and their lending banks.

Uncle Sam has a $1 trln repatriation concern

2 Nov 2011

That’s a rough estimate of how much U.S. companies have overseas invested in Treasuries. Lawmakers want the cash brought home at lower tax rates to foster employment, growth and government revenue. But dumping that debt on the market would inevitably have consequences of its own.

Capitalism takes three big hits in one day

1 Nov 2011

Blame past exuberance for the grim headlines. It created the Greek mess. Dangerous optimism also made investment banks too large. And now private equity hubris has led to the failed ISS sale. These monuments of financial folly are falling apart. The debris is hazardous.

Tough markets prompt Nomura soul-searching

1 Nov 2011

After a $589 million quarterly loss, the Japanese group is shrinking its investment bank. It’s not alone. But unlike peers, Nomura was sub-scale to begin with. Without a sustained market recovery, it is hard to see how Nomura’s global ambitions can survive.

Nabors’ $100 mln payout to CEO offers warning

31 Oct 2011

To hand Eugene Isenberg that much just to give up one of two titles seems absurd. But the board was stuck with a 1987 contract and did reduce his golden parachute. Even so, Nabors has underperformed for a decade. It shows the danger of companies binding themselves too far ahead.

Rock’n’roll becomes form of economic stimulus

31 Oct 2011

That, at least, is the message from the Moogfest, which took place in Asheville, North Carolina, this past weekend. Aside from giving synthesizer geeks an outlet, Rob Cox found the three-day festival making good use of Asheville’s facilities and boosting local businesses.

Jobs bio sequences his DNA but doesn’t unravel it

31 Oct 2011

It could be that’s what biographer Walter Isaacson intended. His book provides plenty of new material from the Apple co-founder and those around him. But this early, authorized tome leaves to others any serious verdict on the man or the sustainability of his business legacy.

Spain isn’t as uncompetitive as you think

31 Oct 2011

The country’s unemployment rate scales new heights even as Spain’s exporters seem surprisingly resilient. The snag is that there aren’t enough of them to get the country growing again.

The Avon lady needs to look in the mirror

28 Oct 2011

Andrea Jung may be a powerful figure in U.S. business, but as CEO of the $8 bln cosmetics company she has twice failed to turn it around. Never mind the federal probe into possible wrongdoing, Avon’s dismal performance is reason enough for Jung to give someone else a chance.

U.S. housing has added problem: mortgage insurance

28 Oct 2011

Many legislators want the government out of housing. Fair enough. But a look at the private business of mortgage insurance serves as a reminder that the private sector also needs an overhaul. Former highflier PMI’s takeover by regulators last week is a case in point.

Enron’s worst legacy: auditors too big to fail

27 Oct 2011

Arthur Andersen sealed its fate when it shredded Enron documents 10 years ago. But prosecutorial zeal may have created a moral hazard monster. Concerns that the world can’t afford to lose another green eyeshade run the risk of diluting standards in the industry.

New Freddie Mac boss needs low pay expectations

27 Oct 2011

The outgoing chief executive of the U.S. mortgage finance behemoth stood to make up to $6 mln a year. But times are, or at least should be, a lot tougher now. A new CEO needs administrative skills, a thick skin and little to no ambition. Breakingviews suggests a help wanted ad.

Hot speech tech firm’s story is too complicated

26 Oct 2011

Nuance Communications has built an $8 bln market cap by getting machines to understand talk. Its technology may even be behind speech recognition in the new iPhone. But its sky-high valuation multiple requires too much trust considering its complex finances and acquisitive ways.

EU bank recap too blunt an instrument for Spain

26 Oct 2011

Europe wants lenders to reach a 9 percent core Tier 1 capital ratio and take haircuts on sovereign debt. But the problem with Spanish banks is their exposure to real estate, not government debt. Forcing only big groups to raise capital also misses the point.

Crop of shock CEO exits reinforces need to plan

25 Oct 2011

Judging by First Solar’s 25 pct stock price drop, you’d think it erred in ousting its chief. Or that Quest’s 11 pct jump meant it should’ve dumped its boss sooner. And no reaction must make IBM’s new CEO a snooze. The real lesson is that boards must carefully plan successions.

Amazon keeps digging costly moat around business

25 Oct 2011

The Internet retailer shocked Wall Street with low profitability due to heavy investment. This expenditure may eventually pay off - that’s why the stock trades at 100 times estimated earnings. But it’s a timely warning that even Amazon must keep girding the barriers to entry.

Netflix’s melting core spells value disaster

25 Oct 2011

Up till now, the company has been cagey about the respective profitability of the two units it was planning to separate. New figures show Netflix makes about 10 times more from a DVD customer than an online streaming subscriber. Trouble is, the wrong arm is shrinking - and fast.

Icahn’s American truck merger pitch has wheels

24 Oct 2011

The billionaire investor often has loopy ideas for M&A among his holdings (remember Lions Gate-MGM?) But a $5 bln-plus combination of Navistar and Oshkosh makes some strategic sense. The net present value of cost synergies could be worth more than their combined market cap.

Apax misses with HIT disposal

24 Oct 2011

The private equity firm’s ownership of HIT Entertainment, the company behind kids’ character Bob the Builder, makes for sad reading. Mattel may enjoy the $680 million company more. But fixing Bob up with Barbie does not necessarily mean they’ll live happily ever after.

Economic stress adds to Turkey’s quake woes

24 Oct 2011

The human cost of the Ercis disaster comes as Turkey fights to keep its once-booming economy on track. Ankara is playing a high-risk game by intervening in markets. It needs higher interest rates to shore up the lira, but the cost may be recession.