What's New Also Noted: News scan: Apple's cash; Amazon's losses; more and much more... News From the Fierce Network:
Today's Top NewsWhy Google may soon take an earnings hit from Motorola
More talk of market manipulation, this time in FX
Also NotedNews scan: >> Liquidity: Most of Apple's "cash" may be invested in technology Billionaire activist Carl Icahn continues to push for a much bigger stock buyback at Apple than the company is planning. His analysis is based on the familiar claim that the company has $147 billion in cash on its balance sheet. But as I explained at Global Finance in September, the company has much less than that in actual cash. More than $92 billion of that is in long-term marketable securities—that is in those that mature in longer than a year—some of which may be equities, which are hardly equivalent to cash (and certainly aren't accounted for as such on Apple's balance sheet). And odds are pretty good that at least some of those investments would be in companies whose technology Apple is interested in, and just might eventually decide to acquire. So how would Icahn know that Apple wouldn't be better off keeping its money invested in those companies rather than liquidating the positions and returning the proceeds to shareholders? If Tim Cook has told Icahn what those investments consist of during one of the dinners Icahn likes so much to tweet about, he hasn't said. Read more >> Governance: Move over, Carl As proxy season approaches, a Reuters profile of activist investor John Chevedden positions him as the "economy-class" version of Carl Icahn and notes that companies such as Apache Corp. and KBR have filed lawsuits to keep his proposals off their proxies. Read more >> Management: No, Jeff Bezos isn't running a nonprofit Amazon has been investing in warehouses again, which is likely to take the Internet retailer back into the red. The company has been profitable since 2003. True, that was two years after then-CFO Warren Jensen told me in 2001 that the company was managing its working capital in such a way as to be profitable by that end of that year. But the company has been making money for almost 10 straight years. Yet now critics are scratching their heads over why investors are giving the company some slack over its current investment program. The critics are out to lunch. A relentless focus on near-term prospects is bad enough. No sense of history is even worse. Read more >> Capital: Twitter's market value could top $11B even as its margins shrink That's based on a capital raise of $1.6 billion at an expected price of $17 to $20 per share, which is not bad for a company whose profits on ad revenue seem to be declining. How's that again? As TechCrunch explains it, Twitter is selling ads as a way for companies to engage with consumers, and its cost per engagement has been falling steadily, by 46 percent in the last quarter, 12 percent in the previous quarter, and 19 percent in the one before that. The lower the cost, the less Twitter gets paid. Of course, the company is more than making up for the decline in payment per ad through increased volume. But where have we heard that before? Read more >> Management: From Wall Street to Main? Wall Street faces a serious slump, according to a recent report by New York state Treasurer Thomas DiNapoli. The government shutdown plus rising interest rates could cut profits in half during the second half of the year, the report states. That warning follows the news last week that Goldman Sachs experienced a sharp decline in fixed-income trading profits in the third quarter. The question is whether these developments are a reflection of secular and not just cyclical decline, especially since Goldman wasn't the only big bank to experience such a turn in what was once a major source of profits and compensation. Not surprisingly, the analysis by the New York state treasurer's office falls into the category of a warning for the local economy. But if it means that more profits going forward end up on Main Street instead of Wall, that's not necessarily bad news, though of course that's a big if. Read more >> Compliance: Bernanke seen testifying in Greenberg lawsuit Super lawyer David Boies has taken court depositions from both Hank Paulson and Tim Geithner about the terms of the AIG bailout in Hank Greenberg's lawsuit against the government over alleged "takings" in the deal. But Boies had to wait until the two former treasury secretaries were out of office, as government officials are immune from any requirement to testify in private litigation. But seeing as how the Fed chairman was also instrumental to the AIG bailout (though he is on record as saying nothing has made him angrier while in office as the need to save the insurer from itself), Wharton law professor David Zaring bets that Bernanke's turn in the court case will come once he steps down. Read more >> Liquidity: Slow adoption of SEPA could disrupt payments in Europe With the euro area's big switch to new SEPA payment instruments just a few months away, the European Central Bank warned yesterday that companies' slowness in migrating to the new instruments could create problems. An ECB report noted that many organizations are waiting until the fourth quarter of this year to make the change, and ECB executive board member Benoit Coeure said companies that aren't prepared for the Feb. 1 switch "risk disruptions in their individual handling of payment orders." ECB data show that while 56.3 percent of credit transactions were done using SEPA credit transfers in September, SEPA direct debits made up just 6.8 percent of debit transactions. Read more here and here >> Technology: Cyber-security breaches don't require hacking It turns out it may not take a cyber-breach to expose your personal data to criminals. One of the major U.S. credit bureaus, Experian, was selling personal information such as Social Security numbers and birth dates to a service that marketed the data to fraudsters. Read more Briefly noted: > Enough junk bonds already, Feds say. Article (Bloomberg) > New Fed rule would require banks to show they can turn a minimum amount of assets into cash in 30 days (see our first Liquidity item above). Article (DealBook) > DuPont to split itself in two. Will GE follow? Article (DealBook) > More Democrats call for delay in Obamacare mandate. Article (Wall Street Journal) > Swedish manufacturers' layoffs call into question Europe's recovery. Article (Wall Street Journal) > Who said interest rates would soar? Article (Wall Street Journal) > Apple isn't the only cash-rich tech giant being pressured to return more to shareholders. Article (Wall Street Journal) > PCAOB sees a sharp rise in deficiencies in companies' internal controls. (Just wait for the JOBS Act to kick into high gear.) Release (PCAOB) > Fox Business discovers that CFOs are no longer bean counters. Article (Fox) And finally... Forget the BRICS. They're now the Fragile Five.
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Friday, October 25, 2013
| 10.25.13 | Why Google may soon take an earnings hit from Motorola
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