Breakingviews

Less, not more, better for New England utilities

November 3, 2011

Too many customers of Northeast Utilities lost power for too long after recent storms. As with banks, risk management and regulation failures are to blame. Towns that run their own utilities offer an alternative; meanwhile, Northeast’s planned $4.7 bln deal needs to be torpedoed.

Jon Corzine becomes poster child of the times

November 4, 2011

The boss of bankrupt MF Global embodies all that Occupy Wall Street opposes - the elite 1 pct, failed high finance and compromised politics. Meanwhile, Corzine’s liberal agenda helped catalyze the Tea Party. His downfall could yet turn him into the fall guy of the crisis.

Bob Diamond sets high bar for bank rehabilitation

November 4, 2011

Banks should serve a social purpose and meet real client needs, Barclays’ CEO argued in a thoughtful lecture. Though the change of tone is refreshing, lenders must now show that reality reflects the ideals. For Diamond, that also means exercising restraint on bonuses.

Groupon makes IPO of scarce shares look cheap

November 4, 2011

The Internet coupon firm’s stock popped as much as 50 pct. Short-term excitement was assured by signing up most of Wall Street to peddle 6 pct of its stock. Longer term, keeping a valuation approaching $20 bln will require more tangible things like profit.

Japan Inc’s earnings problems are home grown

November 7, 2011

Something is amiss with Japan’s biggest names. Sony, Panasonic and Honda were three whose earnings were battered in the latest quarter, but they weren’t alone. Earnings at the 493 Japanese companies that announced results as of Oct. 31 were 57 percent short of their forecasts, according to Deutsche Bank. Excuses abound, from earthquakes to weak U.S. demand. But it’s problems at home that make them so susceptible.

Citi risk measurement scheme warrants closer look

November 8, 2011

CEO Vikram Pandit is touting a plan for financial firms to disclose regularly how risk scenarios play out for a standard, hypothetical portfolio, as well as their own assets. Such a comparative tool might have raised red flags about MF Global -one reason it deserves attention.

China’s Tencent slows as new Internet models bloom

November 9, 2011

China’s second-biggest dot-com by market value saw its slowest quarterly earnings growth in four years. Gaming customers are defecting to new Internet models. Higher costs in micro-blogging and video are hurting margins. Tencent needs a strategy beyond simply getting bigger.

Green Mountain shows how momentum works both ways

November 10, 2011

The coffee company’s stock is the latest to crash down from a nose-bleed trading multiple, following Netflix and OpenTable. Fast growth can help paper over valuation or accounting worries, but in time they often catch up. Chipotle and Salesforce.com investors should take note.

IBM bet doesn’t mean Buffett’s tech spots changed

November 14, 2011

The Oracle famously avoids tech stocks but bought a $10.7 bln stake in Big Blue. Once at the cutting edge of supercomputers, IBM just pulled out of a next-generation project. It’s now a predictable, well-branded consulting firm. IBM’s investment profile evolved, not Buffett’s.

MF Global could finally help SarbOx prove itself

November 15, 2011

The Enron-inspired Sarbanes-Oxley Act helped clean up U.S. companies’ books, albeit at a cost. But approaching 10 years on, enforcers have filed few cases, despite glaring failures in the crisis. Jon Corzine’s fallen firm may at last offer a chance to test the reform’s teeth.