Opening Bell: 7.9.07

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EADS Considers a Simpler Management Structure (WSJ)
EADS, the parent company of troubled Airbus, is pondering a move to rid itself of its dual-CEO system, which is designed to incorporate the national interests of France and Germany. But of course it's the fact that the company has to answer to its government master as oppose to say its shareholders that the company is such a mess and unable to do anything in a nimble manner. The problem is that even if you changed the management structure, it'd be hard to believe that much would actually change politically.
Dow Jones Continues Hunt for an Alternative Bid (NYT)
The Bancrofts aren't quite sold on Rupert Murdoch. Despite having a number of assurances (supposedly) written in place (and etched into marble), it's possible that they still have that old fable about the scorpion in their heads. As much as they try to trust him, they know they can't really. So before they sign on the dotted line, they're making a last ditch effort to find a white knight. Word is that the family is going to talk with Ron Burkle about a possible sale. You know, if they really have so much confidence in the company, why don't the Bancrofts lead a leveraged, management-led buyout? Then they could run it without concern for those pesky public shareholders, who get pitifully hysterical at things like a 40% overnight gain in the stock.
Job Cuts Averted as Bid for Journal Stays Open (NYT)
This might help shed some light on the question of why the Bancrofts aren't jumping to do a leveraged buyout of the company: cause it's a newspaper company, and newspapers aren't doing well these days. Don't let Murdoch's highball bid fool you into thinking that Dow Jones is some island of safe profits in an otherwise stormy see of red ink on newsprint. The cruel economics that are forcing the hands of newspapers all around the country are having their effect on Dow Jones, slowly but surely. Advertising revenues are declining at the flagship paper, leading many to believe that job cuts are a matter of when, not if. It's possible that cuts would've already occurred, had it not been for the Murdoch bid, which put them on the back burner.
Bear Market Tightens Grip on Treasuries as Jobs Gain (Bloomberg)
Economists expect a continued bear market in bonds, as fears about inflation (and inflation itself) continue to pound away at longer-term bills. Returns aren't even expected to compensate for inflation, which would represent the worst year since 1999, when bonds returned -8.25. At that time, the issue wasn't inflation, but the fact that you could make 25% overnight by being in stocks, which led people to quit the bond market. As for inflation's prospects, it's hard to say. People freak out about this every few months right on cue. Maybe it's different this time.


Transforming Paramount? (WSJ)
Buoyed by the initial success of Transformers, Paramount is ready to pull the trigger on turning the movie into a franchise. Duh, of course they are. That's pretty much the one thing that studio executives do these days: decide to turn successful films into franchises with endless sequels. Nevermind that it's lame, or that sequels aren't the sure things they're assumed to be. If you've got something popular (even if it was just a novelty), you gotta milk it. That being said, our three favorite franchises of the past many years, Die Hard, Bourne and Rush Hour, all have sequels this summer, so we can't complain too much.
Sony Cuts the Price of PS3? In the Right Direction, But... (Information Arbitrage)
As we mentioned recently, Roger Ehrenberg has really been hitting some home runs lately with his analysis of the video game market. I'd be surprised if you could find better insight among Wall Street analyst reports with respect to companies like Sony, Microsoft, EA and Nintendo. Sony, which is already losing money on every PSIII sold has announced that it's cutting the price of its boxes, addressing what is one of the device's major stumbling blocks. While the move isn't a bad one, per se, it's probably just going to push the company deeper into the red without addressing the core flaws of the company's strategy. Read more at the post.
Relative values: private equity vs hedge funds (FT Alphaville)
Now that PE and hedge funds are routinely coming public, the public needs to gain some idea of how to value them. They both rake in tons of cash, at least in the sense that they charge a lot. But there's some sense that maybe PE funds should be valued higher than comparably profitable hedge funds. Their assets are less liquid, meaning that investors can't just pull out when they get nervous and they have a number of methods for goosing fee income. On the other hand, hedge funds can take in tons of cash overnight when things are good, deploying it a lot quicker than PE firms can. So the assets under management is likely to swing wildly at hedge funds, with PE funds proving more stable. It's still going to be hard placing a value on these black boxes, but it's worth thinking about criteria that you might look for.
Chinese Supermarket Chain Holds $113 Million I.P.O. (Dealbook)
There must be some sort of holiday in China, because the biggest, most noteworthy IPO is raising a mere $133 million, and it's just a supermarket chain. Aren't there some state-owned banks that need to raise some money today? Don't tell us that they ran out. The supermarket chain, Times Limited, runs supermarket and, get this, hypermarkets. Wow. We need some hypermarkets here, stat.

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