Feb 28, 2014 16:15 UTC

Blackstone bets Versace can go up a few sizes

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By Quentin Webb

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Blackstone is betting Versace can go up a few sizes. The U.S. private equity firm has bought 20 percent of the Italian fashion house at a 1 billion-euro valuation. This is a wager that Versace’s lightweight business can grow to fit its extra-large brand.

Feb 28, 2014 06:04 UTC

Macau casino stocks are priced for perfection

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By Ethan Bilby

The author is a Reuters Breakingviews columnist.  The opinions expressed are his own.

Macau’s casino stocks are priced for perfection. A building boom will expand capacity in China’s gambling enclave. But to justify their valuations, gaming operators not only need to attract more punters but encourage them to spend more at the tables. Any slowdown or increased competition could test excited multiples.

Feb 27, 2014 19:28 UTC

PayPal has outgrown eBay’s warm embrace

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By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

PayPal has outgrown the warm embrace of its parent eBay. The online merchant’s ownership provided rich soil for the payments system to thrive. But PayPal is now mature enough to grow faster on its own. Activist Carl Icahn has a point when he says splitting eBay in two – as first suggested by Breakingviews in 2008 – would make investors some 15 percent richer.

Feb 27, 2014 15:19 UTC

Investors take note: low inflation isn’t deflation

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By Swaha Pattanaik

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

The theory says that bonds benefit and stocks suffer when there’s deflation. In the real world, disinflation has yet to turn into persistent price declines. Sluggish price rises are no bar to equities doing quite well, just so long as there is growth. It’s too early to write off stocks.

Feb 27, 2014 06:56 UTC

SoftBank’s Alibaba stake both blessing and burden

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By Una Galani

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

SoftBank’s investment in Alibaba must be one of the most successful of all time. Billionaire chief Masayoshi Son injected just $20 million into the Chinese e-commerce giant in 2000. Today, the 36.7 percent shareholding accounts for a large chunk of Japanese group’s market value. As Alibaba heads toward an initial public offering, however, Son’s investment blessing may become a burden.

COMMENT

Not sure I buy your conclusion, but a great analysis up to that point. While you are right of course that when Alibaba goes public, investors can simply go there. But surely that doesn’t mean that the valuation of Softbank, affected as it is by Alibaba, will decrease?
If anything, it should increase since the valuation will be straightforward.

As of now there are widely varying estimates of Alibaba’s value, including yours. That uncertainty will no longer be present once the IPO is filed. On top of that, there is a good chance that Alibaba shares will rocket up after listing, since interest in it as well as projections of its future value, are huge. All of this should allow Softbank to lessen that 16% conglomerate discount.

We shall see.

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Feb 26, 2014 21:58 UTC

Bursting U.S. gun bubble begins to take victims

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By Robert Cyran
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Fear of gun legislation following the Sandy Hook School shooting drove U.S. demand for guns to absurd heights. It’s increasingly clear that laws won’t be tightened. Gunsmith Sturm Ruger is the first to admit the emotion that fired up the bottom line has run its course. The reckoning will be painful.

Feb 26, 2014 16:51 UTC

Rudloff’s retirement is bad timing for Barclays

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By Dominic Elliott
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

Hans-Joerg Rudloff’s retirement at 73 comes at an unhelpful time for Barclays. The UK lender’s chairman of investment banking is stepping down after a distinguished career that spanned five decades – long enough for any banker. Rudloff’s achievements are myriad. A doyen of the eurobond market, which he helped create in the 1960s, 70s and 80s, Rudloff also saw the potential in Russia and central Europe in the 1990s, long before emerging markets became fashionable.

Feb 26, 2014 16:51 UTC

AB InBev deserves premium-strength rating

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By Robert Cole

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

AB InBev seems to pump as much cash as beer out of its business. It is the world’s biggest brewer, responsible for the Budweiser, Stella Artois and Corona brands, and even with a 2 percent annual decline in volume it poured 426 million hectolitres of grog in 2013. That’s enough to fill 17,000 Olympic-sized swimming pools.

Feb 25, 2014 06:02 UTC

Weibo IPO plan stretches financial logic

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By Robyn Mak 

The author is a Reuters Breakingviews columnist. The opinions expressed are her own.

Weibo’s planned initial public offering stretches financial logic. Listing a $500 million stake in China’s version of Twitter looks like a response to sky-high tech valuations – most recently Facebook’s $19 billion acquisition of messaging service WhatsApp. But investors can already buy shares in parent Sina, whose value is mostly made up of Weibo already. They should be skeptical about the idea that two plus two is five.

Feb 24, 2014 17:18 UTC

Facebook stock is not so different from bitcoin

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By Rob Cox

The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

With its extraordinary $19 billion swoop on WhatsApp last week, Facebook proved its stock is not so different from the crypto-currency of the moment, bitcoin. They can both be used for certain, specific purposes. Neither is backed by a government. Both depend on vast networks of individuals. And their worth reflects demand, which is based on murky fundamentals. The trick: monetize them while they still have value.

COMMENT

I was thinking a similar set of thoughts yesterday. not the devaluation but the true value of a Facebook in terms of influence and comparing it to a retailer like Walmart. You see people go to Walmart every day and are influenced in buying what is stacked near the door and presented by the vendors on the shelves. All of this presentation is a method which has ben calculated to make you buy more. Think of a model where a Facebook is the new influencer in a virtual retailer sense. They sell advertising and influence people to purchase various things through their social network circles. How is this different from a Walmart model? Yes it is virtual. FB can even enter a new country quite easily and if it does not work out it can exit. Walmart typically has to acquire a competitor in the new country as they need to get in with immediate scale and have bricks and mortar right away to get the good locations. So with this in mind….at 10 years old could Facebook be the new Walmart as they will be everywhere, the largest and the most influential very soon? Maybe the high valuations they are putting on FB shares are justified if you look at the potential. Or maybe I have just been influenced.

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