The neverending debt crisis in Europe continues to be a drag on earnings for manufacturing companies, from General Electric to Honeywell. Some of them have divisions that helped offset the European slowdown, and sales in emerging markets also helped. But the poor revenue in the industrial sector is not good news for them, or for Europe.
After all the drama, Dell is basically back where it started before the pseudo-bidding war for the troubled PC maker began. The Wall Street Journal reported (and other outlets confirmed) that private equity firm Blackstone has decided to end its pursuit of the company. Blackstone was seen as the only plausible competitor to Michael Dell and Silver Lake Partners’ attempt to take Dell private. With Blackstone out, it looks like the founder will keep his company after all.
The numbers: Software company Microsoft beat analyst expectations with a profit of $6.06 billion, or $0.72 earnings per share in its fiscal third quarter. Revenues rose to $20.49 billion, representing an almost 18% jump from the same period a year ago.
Did Pepsi CEO Indra Nooyi throw activist investors a bone today? During the call to discuss the company’s latest earnings, Nooyi said Pepsi is exploring “sensible opportunities to unlock incremental value through meaningful structural alternatives.” “Unlocking value” and “structural alternatives” are sometimes the jargon words used when considering a breakup.
There’s another twist in the saga of Herbalife, the California company accused of being a pyramid scheme. Some distributors for the protein shake company were sent a survey that seems aimed at finding out if Herbalife is indeed a sham. Coincidence?
Apple shares fell sharply today, briefly dipping below $400 a share for the first time since 2011. The drop came after Apple chip supplier Cirrus Logic said future revenues would miss analyst estimates. Cirrus blamed weaker demand for a product made by one of its customers, leading investors to speculate that the product is Apple’s iPhone.
The numbers: Yahoo saw its profit jump 36% year-on-year in the first quarter, to $390.9 million, or earnings per share of $0.35, beating estimates. But revenues of $1.07 billion were slightly lower than the very modest 2% bump that analysts had expected.
It used to be that Washington DC and Brussels were the two capitals dealmakers had to lobby to get their deals approved by regulators. But in recent years, Beijing has become increasingly important, and it is throwing its weight around to prove it.
It’s been a busy day in the telecommunications world. A few hours after Dish Network today announced its $25.5 billion bid for Sprint, the Wall Street Journal reported that Verizon offered to buy Clearwire spectrum leases for $1.5 billion.
This morning’s announcement by satellite TV provider Dish Network—an also-ran to more-successful competitor DirecTV—that it wants to buy America’s 3rd-largest mobile carrier, Sprint Nextel, for $25.5 billion, should come as no surprise. Dish Chairman Charlie Ergen has been courting seemingly every second- and third-tier US mobile carrier, including MetroPCS, T-mobile and Clearwire.
The news that JC Penney has hired Blackstone to help it raise $1 billion could be either good or bad, depending on how you look at it. The US department store chain is talking to private equity firms and others about a stake sale as a potential way to raise cash—the good news. But to invest in JC Penney, you have to believe it has a future, and that’s still in question—the bad news.
It’s no surprise that Deutsche Telekom has given in to shareholder pressure. The German firm has been trying for a while to sell its American subsidiary, T-Mobile, but faced vocal opposition to its effort to do so via a merger of T-Mobile with Metro PCS. Faced with possibly losing the vote at a shareholder meeting scheduled for tomorrow, Deutsche Telekom sweetened its offer. Investors opposed to the original deal now support it. It’s the price Deutsche Telekom had to pay. And that’s the test for every company doing a deal that faces opposition—how badly do you want it?
Brazilian private equity firm 3G Capital is putting its stamp on Heinz, which it acquired along with Warren Buffett’s Berkshire Hathaway earlier this year. Bernardo Hees, CEO of 3G portfolio company Burger King, was named the new head of the ketchup maker.
Lloyd Blankfein, the CEO of Goldman Sachs, has just avoided a second attempt to strip him of his other job—chairman of Goldman Sachs. But the Goldman shareholders who pushed to split his role into two did score some smaller victories.
Potash, the salts that are mined and manufactured to make fertilizers, has been a hot commodity for years. The increase in global food demand because of population growth and improved living standards has triggered a bigger need for fertilizers. As a result, countries have come to view their potash producers as natural treasures, assets that should be protected. The latest example is Israel, where finance minister Yair Lapid said that he would oppose a sale of Israel Chemicals to Canada’s Potash Corp.
Activist investor fund Jana Partners lost its fight to put directors on the board of Canadian fertilizer company Agrium. But Jana’s proposal for compensating its nominees based on Agrium’s stock performance is not going away.
Insider trading allegations in the US have mainly involved hedge funds. Now accounting firm KPMG is being hit with similar claims.
JC Penney CEO Ron Johnson was brought in to turn around the ailing retailer. Instead, he made the situation worse, and sales fell dramatically under his reign. Today the board’s patience finally ran out.
Private equity firms binged on buyouts during the boom of 2005 to 2007. The most eye-popping deal was the purchase of Texas power company TXU Corp. KKR, TPG and other buyout firms acquired the company for about $45 billion, including debt. It is still the biggest leveraged buyout (LBO) in history and showed the clout private equity firms can wield. Now TXU, which is known as Energy Future Holdings, is drowning in $52 billion in debt. That means the biggest-ever LBO will also go down as the biggest ever buyout failure.
North Korea is known for its brinksmanship behavior. But its actions in recent weeks has set off more alarm bells than usual. It has steadily ratcheted up its rhetoric after declaring a “state of war” against South Korea. Earlier this week, it blocked South Koreans from entering an industrial zone at the border between North and South Korea, a move it hadn’t pursued since 2009. Yesterday, North Korea told foreign diplomats that it could not guarantee their safety if there is an armed conflict. And it looks like they may conduct another missile test.
JC Penney’s business has been in free fall over the last year. Sales at the American department-store chain have plummeted and the company has been burning through cash. Today, JC Penney launches a crucial part of its turnaround: boutiques that sell home goods within its department stores. The reception of this strategy will help determine whether CEO Ron Johnson gets to keep his job.
Hewlett-Packard’s longtime chairman Ray Lane has attracted blame for many of the company’s recent woes. Critics said he was a rubber stamp for HP’s disastrous acquisition of Autonomy in 2011, leading some shareholders to call for his ouster. His reelection to the HP board in March came down to a close shareholder vote. HP announced today that Lane is stepping down as chairman and will be temporarily replaced by activist investor Ralph Whitworth.
It’s a heavy responsibility being a company board member, and it’s an even heavier one being on the board of a bank. So says the independent review of Barclays released yesterday, which recommends that because of the higher risks and complex regulation around banking, a decent number of a bank’s directors ought to have worked in finance themselves. But in practice, not many directors at the biggest banks have.
The collapse of brokerage firm MF Global in October 2011 was another reminder of how fragile the financial system can be. But the firm was under a microscope also because it was led by Jon Corzine, a former New Jersey governor who had also been co-chairman of Goldman Sachs. And a report filed today by MF Global bankruptcy trustee Louis Freeh emphasizes what many had already concluded: MF Global’s failure was largely due to Corzine’s mismanagement and risky behavior.
