Breakingviews

Sony stumble gives Loeb headache and opportunity

November 1, 2013

The Japanese group’s quarterly loss knocked 12 pct off its market value. Poor results from both the entertainment and electronics arms suggest there’s limited upside in the spinoff proposed by activist Dan Loeb. However, it could allow him to push for more radical restructuring.

PwC-Booz merger adds up to a major culture clash

October 31, 2013

The deal would be the most prominent example of a Big Four auditor expanding in consulting. That’s where the growth is, but limits on cross-selling accounting and advisory services mean staffers in the two areas could end up brawling over clients. It’s a recipe for trouble.

Even bankruptcy can’t subdue Batista’s swagger

October 31, 2013

The Brazilian tycoon is selling gas assets cheaply to a utility he partly owns, practically goading creditors of insolvent OGX. Their odds of recovering more money still improve by injecting new cash. Pushing these bondholders too far, though, could lead to a painful liquidation.

China’s banks languish in valuation twilight zone

October 31, 2013

The likes of ICBC and CCB earn double the return on equity of global rivals, but trade on the same multiple of book value. Investors are suggesting those returns won’t last. Valuations will only adjust when Chinese banks address fears about what’s lurking on their balance sheets.

Fund managers could learn from hometown Red Sox

October 30, 2013

The team is a win away from being baseball’s champs. Its success hinges on the disposal of concentrated long-term bets in favor of liquidity, early-stage backing and steadier assets. Such diversification is a good reminder for the Boston-based investment industry and beyond.

Chrysler needs $18 bln valuation to justify IPO

October 30, 2013

That’s the point where the union trust fund that owns 41.5 percent of the Detroit automaker would reap more than it could ever get from Fiat. Hitting that figure is doable but would require margins to double by 2015 and investors to forgo a minority discount. It’s a big gamble.

Deutsche’s fixed-income pain could exceed rivals’

October 29, 2013

The German bank suffered a 48 pct fall in third-quarter debt sales and trading revenue - as bad as any peer. But on top of litigation distractions, Deutsche has more to do on leverage. A necessary hacking back of its flabby U.S. repo book may hit its FICC market share.

Apple’s simplicity complicated by status quo

October 29, 2013

Revenue and profit topped expectations and updated iPads are primed for the holiday season. Boss Tim Cook dropped heavy hints of increased share buybacks and a new product in a new category. China growth also is picking up. Each of these factors, however, comes with an asterisk.

One idea Samsung could safely copy from Apple

October 28, 2013

The Korean giant’s $40 bln cash pile is almost as big relative to its market cap as that of its U.S. arch-rival. The hoard allows Samsung to keep investing when others can’t. But with almost two years of capex in reserve, it can afford to mimic Apple and give more to investors.

China bank IPO shows rewards of financial alchemy

October 24, 2013

Bank of Chongqing’s remarkable 32 percent return on equity relies on a trick that is all the rage for the country’s lenders: repackaging loans to look like low-risk investments in other banks. For investors it’s a profit opportunity. For regulators, it’s a potential nightmare.