Monthly Archives: April 2012

John Gapper

President Barack Obama’s proposed “Buffett rule” – that no household making over $1m annually should pay a smaller share of its income than middle-class families pay – may turn out to be good politics but it has a numerical weak spot.

The issue is that the top 0.1 per cent in the US are already paying a higher rate of tax on average than the middle quintile of earners, on the White House’s own figures – 26 per cent compared with 16 per cent in 2010. Read more

Andrew Hill

The caricature of global capitalism puts sandalled do-gooders and corporate suits at opposite ends of the spectrum. Historically, the corporate social responsibility department was walled off from the boardroom, except when the CSR manager came to ask which cause the chairman deigned to support this year, or the chief executive was coaxed out to a community awards ceremony for some awkward back-slapping with his favourite charity-workers.

John Gapper

The message from Kazuo Hirai, the new chief executive of Sony, appears to be “more of the same”. After Howard Stringer, whom he has succeeded, steadily shrunk the Japanese electronics group, Mr Hirai is carrying on cutting.

As first reported by the Nikkei newspaper, Mr Hirai plans to outline about 10,000 further job cuts at Sony. That reinforces the impression that the company that once dominated consumer electronics has yet to come up with a solution to the twin onslaught from Apple and lower-cost competitors. Read more

John Gapper

Perhaps there is good news for book publishers in the talks with anti-trust authorities in the US and Europe on how electronic books are priced. Admittedly, the good news is well hidden.

On the face of it, publishers are in trouble from the threat by the US Department of Justice and the European Commission to strike down their preferred “agency model” for pricing, under which they set their retail prices for ebooks, rather than leaving it to distributors such as Amazon and Apple.

I’ve covered this saga before, and take the view that the anti-trust regulators should not facilitate Amazon’s efforts to control the ebook market with the Kindle by insisting on it being able to discount books as it wishes after obtaining them at wholesale prices from publishers. Read more

My respect for the City of London’s enforcers has gone up a notch with their decision to impose a £450,000 fine on Ian Hannam, a senior banker at JPMorgan Cazenove and a pivotal figure in the commodities and mining boom that has transformed both London and the FTSE 100 index.

Andrew Hill

I hope activist Bill Ackman knows what he’s getting into by backing the purchase of a 29 per cent stake in Burger King.

Mr Ackman is one of the founders of Justice Holdings, a UK investment vehicle that until Tuesday was, to me at least, as little-known as Burger King is famous. But Justice’s decision to buy a minority stake and take the company on to the New York Stock Exchange reminded me how, a few years ago, a rumour that Warren Buffett had his eye on the chain turned out to be a whopperRead more

John Gapper

Occupy Wall Street protestors rally in front of the New York Stock Exchange on March 30, 2012. Image by Getty

Occupy Wall Street protestors rally in front of the New York Stock Exchange on March 30, 2012. Image by Getty

Perception tends to lag events, a phenomenon from which a lot of Wall Street bankers are suffering at the moment. While the general public believes they are still living it up on borrowed money, the reality – for many of them at least – is different.

The squeeze on investment banks, which took some time to occur following the 2008 financial crisis, is now kicking in. As Tony Jackson writes in his FT column, the glory days of easy money for bankers are over (for the time being, at least):

Across the western world, the public rhetoric about bankers is proving oddly durable. They caused our troubles, but are not sharing them. We suffer privations, they get bonuses.

That is somewhat behind events. Investment banking, at least, is in a slow-motion train wreck. The fact that some bankers are still in the buffet car squabbling over the last bottles of champagne is a distraction.

 Read more

Andrew Hill

With scent and skincare giant Coty’s $10bn bid approach for Avon Products, the descendants of Johannes Benckiser have put Bart Becht straight back to work.

Lady Gaga’s first perfume 'Monster', made in conjunction with Coty, is due to be released this year. Image by AFP/Getty

Lady Gaga’s first perfume 'Monster', made in conjunction with Coty, is due to be released this year. Image by AFP/Getty

Mr Becht stepped down last summer as a highly acclaimed (and paid) chief executive of Reckitt Benckiser, the listed household goods and personal care group in which private family company Joh A Benckiser has a 15 per cent stake. By November, with the applause of Reckitt’s investors still ringing in his ears, he had stepped in to chair another Benckiser holding – unlisted Coty, the biggest fragrance company in the world, with perfume brands from Calvin Klein to Lady Gaga’s forthcoming ‘Monster’.

For all the soft-focus marketing of Coty’s products, Mr Becht’s “Dear Andrea” letter to his Avon counterpart Andrea Jung is as direct as the sales pitch for his former employer’s popular Cillit Bang grime-cleaner. The Dutchman writes:

We were surprised and disappointed that Avon’s Board of Directors has no interest in a discussion to explore our acquisition proposal…. We do not understand how your Board’s unwillingness to discuss our proposal can serve the best interests of Avon’s shareholders.

 Read more