Breakingviews

Square swipes a hollow-looking $6 bln valuation

August 29, 2014

That’s what the payments company may be worth after its latest fundraising. It’s big, but a deflated figure, considering Square’s former hype, the small amount raised, and tech rivals’ ease securing higher valuations. Blame increasing competition for Square’s comparative malaise.

Agenda for Tesco CEO: price cuts, board and UK

August 29, 2014

There’s a jumbo profit alert, a hacked-back dividend and lower capex. The new chief exec is also bringing forward his start date. Dave Lewis needs to reduce prices, rebuild the board, and launch a strategic review of the international business.

Snapchat’s valuation soars on tech-land pixie dust

August 27, 2014

The disappearing-photo business has turned 100 mln users, chat-service demand and the $20 mln sale of a tiny equity stake into a $10 bln price tag. Trouble is, the company lacks revenue – and none is in sight. It’s another example of technology dreams trumping real economics.

Tesco should cut its dividend

August 27, 2014

Shareholders ultimately lose out when too-high payouts prevent companies from responding well to problems. Right now, Tesco needs all the financial flexibility it can muster. With a new CEO coming, the UK grocer has a window of opportunity it would be wise to climb through.

Aggressive M&A puts focus on Thai tycoon’s empire

August 27, 2014

Charoen Sirivadhanabhakdi is eyeing more deals on top of the $3.3 bln his drinks-to-property group has spent this year. Investors have given a poor reception to his recent transformative acquisitions. A pick ‘n’ mix approach to public markets may explain some of the doubts.

Burger King tax flip merger logic doesn’t stack up

August 26, 2014

The $9.6 bln burger chain’s investors cheered its talks to buy Canadian doughnut shop Tim Hortons and move its headquarters across the border. There’s little obvious tax arbitrage, and Burger King isn’t larded with foreign cash. Inversion alone can’t justify the market’s appetite.

S&P 500 at 2,000 invites “new normal” thinking

August 26, 2014

A price-to-earnings ratio under 20 is only moderately above average, but U.S. earnings are at a peak relative to GDP. Adjust them to the long-term norm and the U.S. benchmark would be a third lower. Cheap money is still buoying stocks, but such new paradigms usually don’t last.

Hertz gears up for another financial spin

August 21, 2014

Carl Icahn is the latest to buy into the struggling $14 bln car rental firm. Over nearly a century, automakers GM and Ford, an airline, a 1960s conglomerate, private equity and the public have owned Hertz. It’s a perennial investor plaything. Maybe Uber could even be next.

Blackstone finds way to outsource skin in the game

August 21, 2014

The private equity firm’s latest securitisation would normally require it to keep 5 percent of the risk. But Blackstone has found a way to outsource its equity sliver to other investors. The structure looks acceptable – but investors should be wary of copycats that might not be.

Ballmer’s exit value is now Nadella’s to preserve

August 20, 2014

Microsoft’s market capitalization grew by over $100 bln from the day about a year ago the longtime CEO said he would resign to Tuesday, when he left the board. With his predecessor fading from the picture, maintaining the momentum is now firmly in new boss Satya Nadella’s hands.