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Feb 23, 2012
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Twitter revolt could march next on proxy season

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By Jeffrey Goldfarb

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

The revolution is being Tweeted. Social media have enabled political uprisings in the Middle East, the global Occupy movement and even a swift blowback against banking fees in the United States. A logical next step would be for Facebook, Twitter and their ilk to intensify the voice of the investing masses.

Feb 22, 2012
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AT&T board lets CEO off hook for bad call

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

AT&T’s board has let its chief executive off the hook for his bad call. Randall Stephenson’s total compensation fell to $22 million last year from just over $27 million in 2010. That’s a light slap for the badly botched bid to buy T-Mobile USA from Deutsche Telekom. AT&T had to take a $4 billion charge for the break fee related to the deal’s collapse. Though complicit directors factored the monetary costs into their decision, they didn’t hold Stephenson properly accountable for failure.

The T-Mobile takeover plan scrapped by regulators unquestionably took its toll. In 2010, AT&T’s free cash flow was atop its target range and earnings per share surpassed it. Last year, free cash flow settled back into the middle of its range while EPS barely scraped the bottom. Even had the T-Mobile costs been excluded, earnings would have fallen short of target. And while on a longer, three-year horizon, AT&T’s total shareholder return of 9 percent outperformed the broader market, it was near the bottom of its own self-described peer group. That all suggests T-Mobile proved a bigger distraction for AT&T management than even the hefty immediate costs imply.

Feb 21, 2012
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Deloitte caught in Diamond Foods’ glare

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

Deloitte can’t seem to avoid the spotlight. Just a few months ago, it became the first of the Big Four accounting firms to be publicly shamed by their U.S. regulator for past failings. And now another client, Diamond Foods, has admitted to botching two years of financial reports. Deloitte could be headed back into the spotlight.

Feb 9, 2012
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Diamond Foods crashes after running before walking

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By Jeffrey Goldfarb
The author is a Reuters Breakingviews columnist. The opinions expressed are his own. Diamond Foods has been reduced to an injured crawl after it tried to run before walking. The salty snacks purveyor came clean after the market closed on Wednesday about $80 million of bad accounting and replaced its chief executive and chief financial officer. The shares tanked another 40 percent, to under $22, in after-hours trading, and its hope of buying Pringles looks all but dead. It’s a cautionary tale of how hard it is to go from private and small to public and big. But that’s not the only lesson.

Four months ago, Breakingviews pointed to some oddities in Diamond’s financials, including dubious-sounding “momentum payments” to walnut growers. The company brushed off the inquiries. So did most investors: Diamond shares were trading at over $90 apiece at the time.

Feb 3, 2012
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Super Bowl may settle buy-side/sell-side rivalry

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

Sunday’s Super Bowl XLVI clash will reflect another great rivalry – between Wall Street’s sell-side banks and the buy-side investors of Boston’s mutual fund industry. The New England Patriots will be seeking retribution for a loss to the New York Giants in the same season finale just four years ago. The bragging rights this year could help the two groups of financiers decide, Gordon Gekko style, whose form of greed prevails.

Jan 17, 2012
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TPG can be forgiven its mile-high club fetish

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

David Bonderman hasn’t forgotten his first fling. The former lawyer parlayed his 1982 experience as trustee for Braniff Airlines into a deal to buy Continental Airlines out of its second Chapter 11 filing a little over a decade later. That successful bet enabled the Texas takeover artist to co-create buyout biggie TPG. Since then, he has continued to chase airlines the world over, including now bankrupt American. A recent failure hasn’t dampened Bonderman’s ardor.

Jan 12, 2012
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Carlyle’s big payday does private equity no favors

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By Jeffrey Goldfarb

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

Carlyle Group isn’t doing its industry any favors. As part of the private equity firm’s initial public offering process, this week it revealed the lucre reaped by its three founders last year. David Rubenstein, William Conway and Daniel D’Aniello took home a combined $400 million in cash payouts. That’s on top of their nearly $4 million salaries and the profits on $200 million of distributions on personal investments in the firm’s funds. Carlyle’s timing is impeccable.

Jan 10, 2012
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Private equity skewered by Romney-bound arrows

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By Jeffrey Goldfarb

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

Private equity is caught in the crossfire. Rivals for the Republican nomination for the U.S. presidency are leading a full-blown assault on front-runner Mitt Romney’s track record at Bain Capital. The attacks won’t stop Romney, but the collateral damage could hurt the buyout industry.

Dec 28, 2011
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More corporate carve-ups to delight M&A bankers

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

In mergers and acquisitions, 2011 will go down as the year of the spinoff. Activity is on pace to hit $230 billion – six times 2010’s total and approaching a whopping 8 percent of global deal activity, according to Citigroup. With rocky economic conditions unlikely to give chief executives much reason to go shopping, 2012 could bring still more splits.

Dec 23, 2011
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LBO debt gluttons have now gorged on equity too

By Jeffrey Goldfarb

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

Leveraged buyout kings renowned for their debt gluttony have now gorged on equity, too. They’re sitting on nearly $400 billion of cash committed by investors, according to Preqin, or more than $1 trillion of purchasing power. A big slug of it belongs to mega-buyout funds that are already at or approaching their use-by date.