Skip to main content

Opening Bell: 8.7.06

Investors, Including Bono, Buy a Piece of Forbes (NYT)
When Bono joined a private equity firm, Elevation Partners, there was mild surprise, though the guy is pretty loaded so it made sense that he wanted to diversify his holdings. Of course, every time Elevation buys anything, it produces a stream of reports like 'Bono buys video game company!?' etc. But if it just stuck to cool, new media stuff, the whole thing wouldn't seem too out of the ordinary. So of course it's a big deal that the firm has bought a stake in Forbes Media, the parent company of Forbes magazine, the Forbes website, and a few other media properties. And why did the venerable Forbes institution decide to sell a stake in itself now, after all these years? Well, remember what they say about first sons as CEOs. Yeah, Steve really hasn't been a good steward of the family fortune. Two extremely expensive failed runs for President didn't help, nor did the effect that changes in the media have had on the print magazine business. So does this mean that we'll get to see Bono appear on 'Forbes on Fox', giving his forecast for the market? Eventually, they're going to have to replace Jim Michaels with someone. And just to give you some perspective Bono's wealth, fellow bandmate The Edge had to settle for a stake in The Edge Daily, the leading financial publication of Malaysia.
Japan's barbarians within (International Herald Tribune)
In recent weeks, the Japanese market has been dealing with a first-ever incident: a hostile takeover attempt by one Nikkei company for another. Though this is a weekly occurrence here, and on the other side of the pond, it's completely without precedent there, as Oji Paper makes a play for Hokuetso Paper.. Fittingly, the deal is being pushed and prodded by Nomura Holdings, the Japanese Goldman Sachs. Observers generally see the event as a positive sign, a much-needed nod towards shareholder interests, though others are bound to see it as some sort of dagger, killing an old way of Japanese business.

States' Healthy Approach to Wal-Mart (BusinessWeek)

It wasn't hard to see this coming; slowly, the drive to regulate Wal-Mart and its wages is being turned into a competitive advantage for the company. At first, radical proposals, such as the one passed in Maryland that would have required a large outlay on health costs for the company -- and only the company -- were seen as damaging to Wal-Mart's interest. Even the recent measure passed by the City of Chicago, to impose a 'living wage' requirement on big box retailers is dangerous, but now states are looking for a model that helps to insure employees without alienating the company too much. And they may settle on the Massachusetts model, which applies an across-the-board levy to all medium and large business if they don't pay health insurance to their employees. Of course, Wal-Mart does pay health insurance to many employees, and its probably in a better position than its competitors to pay the tax. The company says it's intrigued by the plan, probably the same way it urged Congress to pass a federal minimum wage hike. Wal-Mart can pretty easily absorb a modest tax, while its competitors are less able to. See how the activists play right into the company's hands.
Xerox Will Fund More Job Cuts With Tax Benefit (WSJ)
If you just glanced at the above headline quickly, it might have looked like Xerox would fund more jobs with a tax windfall its getting; look closer. The company is actually planning job cuts with the money, since every time a company lays off employees, they inevitably record a big charge that quarter. Still, it would seem that if job cuts are a good idea, you wouldn't wait for some big windfall to do it. It's a worrying sign that the company feels it needed some cash so that it could do a cost-savings move.

Oil Surges Above $76 as BP Shuts Alaska Field, Largest in U.S. (Bloomberg)
For fans of 'Peak Oil' theory, it's stories like this which they see as helping their cause. BP is shutting down the largest oil field operating in the US, Alaska's Prudhoe Bay field which pumps out 8% of US production. It's not that the site is running out of oil per se, it's not, it's that the infrastructure is degrading and corroding causing significant leakage and loss. The problem is, is that repairs will be expensive, and one wonders why there haven't been repairs to it before. Presumably they didn't just discover the leakage yesterday (though they insist they did). If, as some people will expect, that given the life of the field and the cost of the repairs, it's not a high priority, it will fuel the idea that the sum total of the dirty stuff is getting smaller.
Wis. Cheese Factory Workers Win $208M Powerball (AP)
You'd be forgiven if your first thought upon reading this story was, "wait, isn't like every Powerball lottery won by a group of factory workers". As much as lotteries probably harm the poor and the working class, at least winners seem to often come from their ranks. Well, that's not just a matter of perception. In fact, the street in Fon Du Lac Wiconsin, where the winning ticket was sold is known as the 'Miracle Mile', due to how many winning lottery tickets have been sold there. The store itself has sold several big winners, including a $6.5 million jackpot to a previous buyer. Even the stores owners once won a lesser lottery, though still for over $100,000. Then again, there's a reason why the factory worker angle is so common. People buying in groups are more likely to win, and there's probably more people pooling together to buy tickets when the jackpot gets really high. We don't hear about most lottery winners, so what feels like deja vu, may just be selection bias.
Viacom, Google partner on ad-backed videos (Reuters)
Google is now entering its strategic phase called "let's sign some deals with old media so it won't hate us". Last week the company signed a deal with AP, of all companies, allowing Google to use and distribute its content somehow. Now, it's announced a deal with Viacom to distribute MTV clips and commercials across its network of publishers. Typically, Google isn't inclined to sign exclusive deals relating to content. That's more Yahoo's tip. Yahoo runs around bragging about syndication deals with Gawker media or exclusive Jessica Simpson ringtones. Meanwhile, Google calmly does its search thing and rakes in the big haul. But as Google looks to expand its business, it's got to party with the rights holders.
EU Approves Goldman Sachs-Led Consortium Bid to Buy Associated British Ports (AP)
Despite the fact that the French (and quite possibly all of Europe) probably consider the US to be a state sponsor of terror (or a terrorist organization unto itself), it has agreed to let a Goldman Sachs-led group take over a British ports group. Apparently the US' rejection of a ports takeover from a Dubai company didn't set some sort of protectionist precedent, whereby countries hunkered down to keep their ports locally owned. At least as far as we know, there's no reason to associate Goldman with terrorism, or any other threat to national security.