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Blog Profile / Reuters Breakingviews Blog

Filed Under:News
Posts on Regator:3034
Posts / Week:17
Archived Since:June 19, 2011

Blog Post Archive

Santander has a 6 bln euro capital opportunity

The Spanish bank’s diversification and earnings power are cushions against a shock. But the core capital ratio looks tight. Given Santander’s high valuation, there may not be a better time to boost equity and silence capital sceptics. Raising 6 bln euros would do the trick.

Apple CEO Tim Cook gets $25 billion warning shot

That’s the value wiped off the stock after a botched system update and reports its new phones can be bent. It’s a small hit for a $600 bln company. But the 2012 Maps fiasco is a reminder that one-off issues may presage more pain. Cook needs to nip this one in the bud.

Sam Waksal’s new biotech tests Wall Street amnesia

The former ImClone boss who went to prison for an insider trading scandal that also ensnared Martha Stewart plans to take his latest venture public this year. He follows second-chancers like Donald Trump and LTCM founder John Meriwether. Investors can be astonishingly forgiving.

World should steel for peak China demand

Chinese consumption of crude steel fell in August for the first time this century. Slowing housebuilding is adding financial strain to a troubled supply chain. A rethink of how much is enough for the world’s biggest steel user could also throw the global market off kilter.

Wall Street needs sheriff more than toll collector

U.S. Attorney General Eric Holder is stepping down after squeezing multibillion-dollar penalties from banks. He had less success securing convictions, leaving law enforcement just an expensive cost of doing business. Next financial crisis, Uncle Sam should send in a tougher cop.

Sinopec’s petrol station revamp is an uphill job

The Chinese oil giant wants to sell more from its 23,000 pump-side stores. But even if non-fuel sales rise sixfold, the unit won’t be worth a lot more than the $58 billion valuation put on it by outside investors. Breakingviews’ calculator spells out the scale of the challenge.

Tesco chairman should step aside

Richard Broadbent will struggle to restore market confidence in the UK retailer. This week’s accounting scandal compounds existing concerns about his period at the helm. The priority should be an orderly handover to the right successor. But speed matters too.

Uncle Sam gets wires crossed on data privacy

A hacker went to prison for exposing personal information AT&T didn’t protect. Now prosecutors are defending the legality of doing essentially the same thing in the Silk Road drug website case. Online privacy laws are flawed when enforcers can’t decide what’s allowed.

BNP Paribas needs a chair to shake up its board

Baudouin Prot is resigning as the French bank’s chairman. His likely successor is technocrat Jean Lemierre. As an adviser to Prot he’s hardly an outsider. But that’s less vital than a readiness to refresh BNP’s board following its mega-fine from U.S. regulators.

Starbucks avoids froth in $913 mln Japan buyout

The U.S. coffee chain is buying the 60.5 pct of its Japanese business it doesn't already own at a discount to the unit’s market value. Expiring licenses give Starbucks a chance to take control of a large market on the cheap - as long as minority shareholders don’t resist.

Tax clampdown could deter half-baked pharma M&A

The U.S. attack on companies relocating to avoid taxes will calm pharma’s M&A binge. Deals like AbbVie’s purchase of Shire may survive on strategic logic. Pure tax-driven combinations, like Mylan/Abbott, look tricky. That lessens AstraZeneca’s vulnerability to a bid from Pfizer.

Is “stranded costs” a euphemism for fat?

The answer to that question may determine the winner in the latest activist battle to captivate Wall Street: Nelson Peltz’s siege of DuPont. The billionaire’s controversial arithmetic suggests the chemicals giant has grown bloated over its 212 years. He’s on to something.

Giant fertiliser combo looks tough to cultivate

Norway’s Yara is talking to U.S. rival CF Industries about a $27 bln tie-up. The two boast similar valuations and could reap sizeable synergies. Hence a near-$1 bln jump in Yara’s market cap. But a merger of equals is one of the trickiest deal varieties.

China rich list misses most valuable asset: status

Tech stars like Alibaba’s Jack Ma and Lei Jun of Xiaomi dominate the ranks of China’s wealthy, closely followed by property magnates. But such measures are incomplete. Cash buys status for the lower ranks. For those at the top, political connections are the currency that matters.

How Big Oil could grease invisible hand

“Pump” contends that democracy at the gas station would help U.S. democracy more broadly. Offering drivers fuel choices like ethanol, as Brazil did, might ease the grip of Exxon Mobil and its peers. The film makes a convincing case, even as it evades some inconvenient truths.

Tesco chairman approaches his sell-by date

The UK retailer’s warning that guidance was overstated by 250 mln stg reflects a serious controls failing. Chair Richard Broadbent recently delivered a new CEO, but has been slow to fix the board. His own lack of retail experience is starting to look like a drawback.

Alibaba IPO highlights SoftBank’s value dilemma

Following the Chinese e-commerce group’s listing, the Japanese conglomerate’s 32 pct stake is worth $75 bln. It eclipses the value of SoftBank’s core businesses. The near-5 pct drop in SoftBank’s shares after the IPO is a reminder the investment is both blessing and burden.

Larry Ellison cedes driver seat with hand on wheel

The Oracle founder is stepping down as CEO, but his 25 pct stake in the software giant – and dual role as chairman and chief technology officer – ensure he’s far from relinquishing control. Splitting his old job between two executives could, however, lead to a bumpy transition.

NFL only understands hits where they really hurt

The U.S. football league has thrown its weight around to grow into a $10 bln entertainment colossus. Victims of the sport’s violence get trampled until the likes of Anheuser and Nike play offense. Corporate America may be all that keeps the NFL from going the way of boxing.

VC bigwigs reveal Valley’s contradictions

Peter Thiel’s new book sets out possible features of the next world-changing startup that will earn its founders a monopoly – another Google, say. Ben Horowitz’s focuses on running a tech company amid fierce competition. One is about vision, the other – for most people – reality.

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