Breakingviews

Duracell jolt highlights the value of focus at P&G

October 24, 2014

Investors were energized by the consumer-goods giant’s plan to offload its struggling batteries arm. Spinning off a low-growth commodity business won’t create much value on its own. But it’s a solid step in boss A.G. Lafley’s campaign to simplify the sprawling $225 bln firm.

Amazon’s ambition outruns its cash flow

October 24, 2014

The online retailer’s 20 pct sales growth in its third quarter was slower than expected, and its $437 mln loss was an ugly record. The firm’s voracious need for investment is a problem. CEO Jeff Bezos’ vision may be limitless, but his company’s ability to finance it is not.

Amgen boss makes a prime breakup target

October 22, 2014

Former Morgan Stanley banker Robert Bradway runs the $109 bln biotech being eyed by activist Dan Loeb. Splitting into a cash cow and a growth arm comes up often in the industry but rarely happens. In Amgen’s case, its drug focus and the CEO’s background give the idea a chance.

FX business now shares equities’ harsh economics

October 21, 2014

That’s why recently resurgent volatility in currency markets won’t restore investment banks’ revenue. Blame a secular shift in FX, and the rise of electronic trading.

Adidas can’t afford to be sentimental about Reebok

October 20, 2014

The German sports group is reportedly set to receive a $2.2 bln offer for the unit. Having overpaid for Reebok in 2006, Adidas has since turned it round and may be loath to sell. But Reebok has little strategic use. Fiduciary duty demands a cold appraisal of its financial value.

Spreadsheet bungles alive and well in high finance

October 20, 2014

No less a practitioner than Goldman Sachs double-counted some of Tibco Software’s shares in calculating the company’s value in a sale worth $4.3 bln – oops, sorry, $4.2 bln. The mistake probably didn’t change much. What’s telling is that no one spotted a fairly obvious blunder.

Goldman pulls every lever to make machine run

October 16, 2014

Bankers and traders helped the firm increase profit 50 pct from a year ago. Investments like Tesla supplier Mobileye contributed, too. Socking away less for pay, though, provided the real fillip to 11.8 pct return on equity. In tough times especially, that’s how it should work.

Netflix stock horror follows familiar script

October 16, 2014

The film and TV streaming service lost $7 billion of market value after it signed up fewer new subscribers than expected. Even for one of the most-shorted and volatile stocks, a 25 percent decline is notable. And yet investors have seen this movie many times before.

CICC loses a princeling, gains investment appeal

October 15, 2014

China’s first home-grown investment bank may lose some political stature without the son of ex-Premier Zhu Rongji at the helm. An IPO may have to wait. But things were already glum before Levin Zhu checked out. A new CEO may actually make CICC more appealing for outsiders.

Markets finally side with economy on bad news

By Edward Hadas
October 13, 2014

For the past five years, an addiction to easy money explained most stock market moves. That era may be ending. Investors seem to be paying more attention to the surprisingly harsh economic environment. With policymakers running out of options, the gloom could worsen.