DealZone

Deals wrap: Nokia Siemens focuses on North America

The Motorola logo is seen on the companies corporate headquarters in Schaumberg, Illinois, February 3, 2009. REUTERS/John Gress

Nokia Siemens Networks is buying Motorola’s telecom network equipment business, boosting its position in North America and taking the number two spot in the cut-throat mobile gear market.  * View article * View factbox

Business Insider looks back at Nokia passing on a Palm deal and calls it possibly “one of the dumbest moves in handset history.” *  View article

Labored over for a year, the Wall Street reform bill may not allow President Barack Obama to reap political rewards – at least not in the near term. Some see the overhaul of the financial regulatory system as too complex to resonate with voters. *  View article

With President Barack Obama set to sign Wall Street reforms into law on Wednesday, Roger Altman gives some pointers on how government and business can get along in a NYT Op/Ed article. The New Yorker takes a look at White House special adviser Paul Volcker. VentureBeat asks what effect will the financial reform bill have on angel investing?

Could Google/China bust up be bad for Disney’s bus stop?

Walt Disney is leading a group effort to buy into China’s largest bus-based digital media and advertising company, Bus Online. The investment would be peanuts for Disney, but the headache could wind up being jumbo sized because one of their investors in the bus deal, sources tell us, is Google.

Google threatened to quit China only a few weeks ago and the internet search giant is finalizing a deal that will let the U.S. National Security Agency (NSA) help it investigate the corporate espionage attack it thinks originated in the People’s Republic. China has warned the U.S. not to make politics out of the Google issue, but it may be too far into the saber-jangling season for that, with Barack Obama having announced fresh U.S. weapons sales to Taiwan in his State of the Union address.

Though Google’s stake in the Bus Online deal is said to be small, even smaller than the tiny investment this will be for media giant Disney, it could just be big enough to cause headaches for Mickey and Co.

Obama’s bank plan — good for M&A?

President Barack Obama’s plan to limit financial risk-taking could drive eager bankers, who had seen the juiciest business at the prop desks, to return to Mergers and Acquisitions — the former darling desk of Wall Street.

Picking a fight with the financial titans (that just last week sent their top executives to offer platitudes to Congress about the financial disaster they created), the administration unveiled a plan that would stop banks from playing with their own money to take risky positions – the so-called proprietary trading operations.

Way back when, these were small, cloistered parts of the business, shying away from attention and very much in the shadow of the mighty M&A side of the investment banking world.

‘New GM’ Gets a Visit from a Shareholder

obamalordstown1 GM’s Lordstown, Ohio assembly plant has become a symbol of both GM’s hard times and its best hopes for a turnaround after a $50 billion federal investment. A recent bump in sales because of the government’s “Cash for Clunkers” program has allowed GM to call back more than 1,000 workers from layoff.   So it was a natural backdrop for a return visit by President Obama, who held a roundtable with workers and then gave a stump speech from the factory floor for his economic policies and health care reform.   But this is not your father’s GM anymore and nothing about it as clear-cut as it seems — even if you are the leader of the free world and head of the government that holds a controlling stake in the automaker.     At one point, Obama — veering from his prepared remarks — suggested that health-care reform would allow the UAW-represented workers in the audience to negotiate better wages.

“Think about it. If you are a member of the union right now, you’re spending all your time negotiating about health care. You need to be spending some time negotiating about wages, but you can’t do it,” he said.

 

In fact, the UAW locked itself into a contract limiting wages and changes to health care, without the ability to negotiate with a threat of strike, until 2015. These stands were agreed to by the union at the prodding of the Obama administration, which demanded that union autoworkers accept lower wages — as a condition to the bailout that saved Lordstown — to match non-union workers at Toyota plants in Kentucky and Honda plants in Ohio.

S&P: No subtext in industrial exodus from benchmark

Manitowoc Co is set to be the third U.S. manufacturer dropped from the Standard & Poor’s 500 index this year — but the brains behind the benchmark said the shift does not reflect a desire to soft-pedal the sector. 

David Blitzer“Our general concern about sectors is the proportions of sectors in the market and the index should be close to one another, and close is around a percentage point or so,” said David Blitzer, an S&P managing director who chairs the index committee. “Given that the 500 is 75 to 80 percent of the total market cap of the U.S. market, we’re never going to be too far off.”

S&P said late on Monday that it would remove Manitowoc, a maker of cranes and ships, from the benchmark S&P 500 after the close of trading on Aug. 31, noting that its market capitalization ranked it last in the group.

The Value of Experience

BRITAIN/(Corrected – Bank of America did not purchase Countrywide early this decade)

Now that the nation’s top public servant is wielding The Donald-like powers over chief executives of bailed-out companies, expectations are high that more heads will roll, and Bank of America CEO Kenneth Lewis is looking like the next contestant on a new economic prime-time drama: The Executive.

Rick Wagoner, ousted as General Motors CEO, had spent more than three decades in the company and had been in the driver’s seat for most of the last one. He also presided over the era of the energy-unfriendly Sport Utility Vehicle and is criticized for sticking with trucks far longer than he should have.

Office of Executive Compensation, it’s a Public-Private Affair

NETHERLANDS/It’s hard to imagine a less free-market initiative than having Washington approve executive compensation packages. But by the same token, the astronomical fees charged by many company chiefs would seem to defy laws of gravity, though not necessarily nature. Top athletes know the score: executive compensation has a relational value that outweighs its nominal one. That is to say, it’s not how much you get paid that’s important; it’s whether your paycheck is bigger than your competitor’s. That’s how Goldman Sachs CEO Lloyd Blankfein can walk away with a $65 million pay check in 2006. This is a nonsensical amount of money – more than could be spent by the family Blankfein over several generations. But for Goldman Sachs shareholders, it represents a trophy.

The Senate is doubtless trying to take a deep breath after the House passed legislation aimed at taxing bonuses of AIG and other recipients of government aid. Over at the White House, details of a plan to go Dutch with private investors on the bill for the years-long rave that ended with Wall Street’s crash last year are due later today. And speaking of Dutch, the Finance Ministry in The Hague said it would tackle bonuses at companies receiving government support. And big Dutch bank ING said it was asking some staff to give back their bonus payments for 2008.

The Netherlands and the United States are in similar ways two of the biggest boosters of commercial capitalism in the history of Western civilization. Clearly, they should be taking the lead in rewriting the theory of financial Darwinism.

Pushing Drugs

USAThe drums of consolidation in Big Pharma were beating loudly after Pfizer bid for Wyeth in January. And as Merck and Schering-Plough were already teamed up on key drugs, the deal they announced this morning was hardly a shock. Though analysts said the pact has lots of logic to sell it — the companies are practically neighbors in New Jersey — the market is playing defense, so any excitement about Monday merger mania was quickly quashed as the economic Thorazine kicked in.

Long the preferred defensive play in a downturn, Big Pharma has been suffering along with the rest of the market as investors unwind the bull-market era and dump stocks for treasuries in the face of the biggest surge of new government debt issuance in living memory. Plus, consider that just last week the Obama administration was marshaling the president’s executive might to make good on a campaign pledge to tackle soaring health-care costs. Considering the environment, the strength of logic might not be enough to cast the Merck/Schering-Plough deal as anything other than a defensive necessity.

Shareholders are acting defensively as well. Merck shares were retreating in premarket trade, indicating a lack of confidence that the synergies of the merger will overcome what ails Wall Street.
Deals of the Day:

Princely Sums

(fixes typo in third paragraph)

MARKETS-STOCKS/Talk about the end of the salad days. The White House is pledging action against “irresponsible” bonuses for executives at bailed-out Wall Street companies and Senator Claire McCaskill has proposed a law to cap their compensation to $400,000 a year.OBAMA/

Masters of Wall Street should not make more money than the president of the United States, she argues, at least not until they wean themselves from government aid. So what’s a Wall Street executive to do on only $400,000 a year? Here are some ideas – precluding paying rent, buying food, putting gas in the car or getting the poodle a trim:

MADOFF/REAL ESTATE: Thank goodness the property market crash has opened some affordability gaps for the newly upper-middle-class executive. The prospective banking executive could pick up a one bedroom, one bathroom co-op condo on West 45th street, or see if she could get a mortgage on Bernard Madoff’s Montauk $3.3 million East Hampton estate. In this market? Unlikely. Plus, agents will tell you the market price is actually much higher. Pity.

Stocks climb, bonds fall on Obama victory

Global stocks rose on Tuesday night as Barack Obama‘s history-making victory became apparent.

“People are hoping that we are seeing a path here to a resolution of one key uncertainty on the investment scene; who will be the leader of the free world,” said David Dietze, chief investment strategist at Point View Financial Services, Summit, New Jersey.

U.S. Treasury prices fell as the safe haven bid waned with global stocks rising. The 2-year note’s price traded down 3/32 for a yield of 1.44 percent.