Yahoo’s deal with Google: Band-Aid
So Yahoo and Google scaled back the terms of their search advertising deal in what looks like a last-ditch, attempt — at least for Yahoo — to get it past U.S. regulators.
Some analysts called it the Band-Aid deal, while others said it smacks of desperation.
Frost & Sullivan’s digital media global director Mukul Krishna said the revised terms were “more of a Band-Aid than the extensive surgery” Yahoo needs.
Barclays Capital’s Douglas Anmuth had a similar take: “We have long viewed the search outsourcing deal as a Band-Aid-not-a-panacea for Yahoo, but compromised terms or an outright rejection of the deal would likely force Yahoo to consider other strategic measures.”
Those “other” measures are a merger of Yahoo and Time Warner’s AOL unit, or Yahoo shareholders’ ultimate dream: Microsoft coming back to woo Yahoo.
Eric Jackson, the dissident Yahoo shareholder who sold his fund’s 3 million Yahoo shares in September after being convinced regulators would nix the Google deal, said: “You just gotta hope that the love bug bites Microsoft again and they want to come back.”
Sanford Bernstein analyst Jeffrey Lindsay said he expects Yahoo’s deal with Google to falter and for Microsoft to come back next year with a bid of around $20 per share. That may not sound too bad considering Yahoo is trading at $13, but remember that the last Microsoft offer had been for $33 a share.
AIG says to report ‘earnings’. Really???
American International Group, the once giant insurer which has become best known as a sinkhole for government money, says it will report third-quarter results on Nov. 10.
Most notable was how AIG described what almost certainly was one of the ugliest reporting periods in financial history: “AIG’s earnings release and financial supplement will be available in the investor information section” of its website.
Earnings? According to the Merriam-Webster dictionary the use of the word “earnings” means money was earned during the quarter, or that the company will report there was money left in the coffer after pay outs. That is unlikely, at least based on analysts’ expectations.
Analysts’ on average expect AIG to report a loss of $1.69 a share in the third quarter, according to Reuters Estimates. It will be the insurer’s fourth-consecutive quarterly loss.
Maybe the insurer should have stuck with the word “results.” It would likely be more accurate and sounds better than the other alternative, “loss report.”
The company’s quarterly report will be its first since it accepted a $85 billion federal bailout on Sept. 16. Since, the insurer has been extended more federal aid, putting a total of $123 billion in taxpayer funds at its disposal.
So much for unbiased journalism. Did the author chew on a lemon before writing such a bitter-tongued article?
What would Buffett do?
As the U.S. Treasury thinks about expanding its capital injection program to include companies such as GE Capital and CIT, it may want to ask itself, what would Warren Buffett do?
Buffett’s Berkshire Hathaway is buying $3 billion of preferred GE shares that carry a 10 percent dividend, and also has the option to buy another $3 billion of GE common stock at $22.25 per share, which is 28 percent higher than the 52-week low of $17.41.
In Goldman, the billionaire investor agreed to buy $5 billion of preferred stock that carries a 10 percent dividend and receive warrants to buy $5 billion of common stock at $115 per share, now 55 percent higher than the 52-week low of $74.
Compare that to what the Treasury has done so far.
In JPMorgan Chase, for instance, the Treasury bought preferred shares worth $25 billion, carrying a dividend of just 5 percent for the first five years and 9 percent after that. It also got warrants for 88.4 million shares at an exercise price of $42.42, which is 45 percent higher than the year’s low of $29.25.
One banker said the election could determine the terms on which the Treasury decides to make more capital injections, with taxpayers likely to get a better deal under Barack Obama.
“Any deal would look more like a Buffett deal than a Paulson deal,” said Dan Alpert, a banker at Westwood Capital in New York.
buffett, needs to buy the majority stock in g.m. and ford ,then he can turn these two blind companys around to produce more energy efficient cars gov. should not they need to restructure our auto industry now but buffett is probably to scared to take a risk like that
Car and Driver
Panasonic‘s designs on rival Sanyo could produce an $8.7 billion deal, and analysts in Japan seem to think creating a solar power and hybrid car-battery powerhouse is a good fit for a green future. Panasonic runs a car battery venture with Toyota, while Sanyo offers nickel-metal hydride batteries to Ford and Honda and develops lithium-ion batteries for cars with Volkswagen. Unfortunately, the auto industry is a bit strapped right now. Both presidential candidates have vowed to make high-efficiency cars a big priority, so PanaSanyo must be thinking beyond automakers’ empty pockets. But so far, Detroit has had little luck impressing lawmakers with the need for taxpayer funding for the future of their industry, and one can only think that shipping dollars to Japan to buy batteries would be even less appealing in a recession. Shares of Panasonic rose 6.8 percent on Tuesday, while Sanyo rose 34.5 percent to its daily limit, helping the Nikkei average to a rise of 6.3 percent. Panasonic says nothing has been decided on a Sanyo purchase, but the Nikkei business daily reported a deal could be announced by Friday. If PanaSanyo wants to double-down its bet on the car market, it might also consider picking up XM Sirius – if nothing else, they can probably get it for a song.
Deals of the day:
* Want Want China, one of China’s biggest snack makers, said its chairman, Tsai Eng-meng, and family members had reached an agreement to buy Taiwan’s media firm China Times Group for an undisclosed sum.
* Tycoon Richard Li and China Netcom, the two largest shareholders of PCCW, have reached an agreement to buy out other shareholders of the city’s dominant fixed-line provider for up to $2.5 billion and take the company private, a newspaper reported.
* Japanese electronics conglomerate Fujitsu will buy Siemens 50 percent stake in their PC joint venture for 450 million euros ($567 million), aiming to boost its presence in Europe.
* Bezeq Israel Telecom, the country’s biggest telecommunications group, said it sold its satellite communications operations to RRsat Global Communications Network for $15 million.
* Bahrain Telecommunications (Batelco) declined comment on a newspaper report that Saudi Telecommunication was in talks with Bahrain’s sovereign wealth fund to buy up to 60 percent of Batelco.
from Global Investing:
Banks: what price freedom?
What price freedom? Or at least freedom from government interference?
Barclays needs to answer that question after selling big stakes to Middle East investors rather than tap taxpayer funds. The bank is effectively paying 13 percent annual interest for at least a decade, whereas it could have paid the UK Treasury 12 percent for a few years. Add in a whopping 300 million pounds in fees and the deal could cost shareholders as much as 3.2 billion pounds extra, Merrill Lynch reckons.
Barclays shares have lost almost 20 percent in two days and many investors aren’t happy about the cost and the bank riding roughshod over shareholders.
KKR IPO on Hold
The site of one of the first and most celebrated market crashes in history, the tulip mania of the early 17th century, Amsterdam provides a perfect backdrop for private equity to consider its options.
Back in July, the S&P 500 was only down about 13 percent on the year and the debate was whether the U.S. had narrowly averted recession. It was around that same time that KKR announced a what seemed like a bold, confident move to merge with its Amsterdam-listed business, delist there and list in New York.
Now it’s November and the question is not whether there is a recession, but how deep and long it will be. KKR’s Amsterdam affiliate says its net asset value has sunk 22.6 since the start of the year – far less than the S&P’s fall of more than a third in 2008, but still enough to cool KKR’s jets. The merger is being put back to next year, which may still prove to be a bold and confident time horizon given the increasingly dire predictions for the global economy.
Along with its hash bars and state-regulated brothels, Amsterdam emerged as natural place for private equity firms to entice retail investors. Names like Lehman Brothers and Carlyle Capital were once the hallmark of private equity investment for savvy retail buyers. Carlyle’s Amsterdam business went bankrupt in March.
Deals of the day:
* The Bank of Cyprus said it concluded the acquisition of 80 percent in Russia’s Uniastrum Bank for $576 million as part of its expansion strategy abroad.
* Etihad Etisalat, Saudi Arabia’s second-largest telecom operator, said it had bought 94 percent of local internet and data communication provider Zajil for 80 million riyals ($21.3 million).
