Monthly Archives: May 2012

John Gapper

JP Morgan’s sudden conference call to disclose, and to try to explain, the $2bn trading loss that it racked up in only six weeks was one of the most absorbing bits of live financial theatre since the 2008 crash.

The star of the show, naturally, was Jamie Dimon, the bank’s ebullient and outspoken chief executive, who has been out in front leading the industry’s defence of “too big too fail” banks and pushing back against new capital requirements.

Oops.

Mr Dimon isn’t given to mincing his words and he certainly didn’t this time, as I noted on Twitter while listening:

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John Gapper

Ron Johnson, the former head of Apple Stores, who is now trying to revitalise J.C. Penney, the historic US department store chain, has started with a good idea – eliminating sales commissions.

The Dallas Morning News reports that J.C. Penney hourly workers at its 1,100 stores have been told that commisions are being eliminated and they will instead receive a higher hourly rate (via Business Insider). Read more

It is sad to see a venerable partnership disappear but Dewey & LeBoeuf, the New York-based law firm, wasn’t one any more.

Andrew Hill

Spare me the “shareholder spring” allusions. Not only does the parallel devalue the genuine sacrifice of those who took part in the popular revolts of the “Arab spring”, it misrepresents the nature of the shareholder rebellions that have now defenestrated three UK chief executives, including, today, Andrew Moss of Aviva.

Andrew Moss - no longer lord of all he surveys

Andrew Moss – no longer lord of all he surveys

The natural assumption is that high pay is the root cause of investors’ disgruntlement, whereas tone-deafness on remuneration was merely a symptom of a wider concern about Trinity Mirror, AstraZeneca and now Aviva. What really did for Mr Moss (apart from his habit of letting himself be photographed looking out over the City, like a jut-jawed lord of all he surveyed) was his performance not his pay. Read more

I admire the chief executive who once described his attitude to the quarterly earnings report to me like this: “We spend three days before and one day after getting busy – and then we go back to running the business as usual.”

John Gapper

Facebook’s video for retail investors in its forthcoming initial public offering is a nice innovation, but fundamentally, Facebook is taking a step back from Google’s IPO in 2004.

The IPO bookrunners and co-managers are a litany of Wall Street names, led by Morgan Stanley, JP Morgan and Goldman Sachs. But Facebook has dropped Google’s attempt to upend the IPO process by running an electronic auctionRead more

Andrew Hill

Shortly before Mario Draghi started his press conference at the European Central Bank’s meeting in Barcelona on Thursday, his predecessor Jean-Claude Trichet was addressing a more sympathetic audience at the St Gallen Symposium in Switzerland. If anything, Mr Trichet was probably the cagier of the two.

In spite of some robust questioning from the BBC’s Stephen Sackur, the former ECB president came across as unrepentant about the ECB’s role during the eurozone crisis. He argued, for example, that 14 years ago, 99 per cent of observers would have dismissed as impossible that the euro would keep its value amid low inflation – a performance that he said bettered that achieved by the national central banks in the 15 years before the single currency’s birth. “Had I added that this [performance] would be observed after five years of the worst crisis ever, [the sceptics] would have been 100 per cent,” Mr Trichet said. The nearest he came to admitting to flaws in the eurozone project was when he said the financial crisis had been “like an X-ray or scanner that reveals the problem you might have”. Read more

“You’re going to need a bigger boat,” says the police chief played by Roy Scheider in the film Jaws, when he first catches sight of the shark. Faced with cancer, diabetes and Alzheimer’s, we need a bigger investment vehicle.

John Gapper

Chairperson of the Congress-led UPA government Sonia Gandhi (L) talks with Indian Prime Minister Manmohan Singh. Getty Images

Chairperson of the Congress-led UPA government Sonia Gandhi (L) talks with Indian Prime Minister Manmohan Singh. Getty Images

India does not get a lot of love compared with other Bric countries – particularly China and Brazil. As far as many western investors are concerned, it can be a protectionist, bureaucratic market with plenty of political risk.

That was certainly the mood at the Milken Institute conference in Los Angeles on a panel of private equity investors. David Bonderman, a founding partner of TPG Capital, put it most forthrightly:

“We stay away from places that have impossible governments and impossible tax regimes, which means Sayonara to India.”

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John Gapper

There aren’t too many fat attendees of the the Milken Institute Global Conference in Los Angeles, where I am spending a few days this week. They are mostly high achievers who are lean and mean.

Two-thirds of US adults and one in five children are overweight or obese

Two-thirds of US adults and one in five children are overweight or obese

That is probably just as well, given what Michael Milken, the pioneer of the US high yield bond market, whose eponymous foundation runs the event, thinks about the estimated $1,000bn added annually to US healthcare costs by obesityRead more

Andrew Hill

Rupert Murdoch

Rupert Murdoch

It will be a shame if bitter and partisan debate over whether Rupert Murdoch is “a fit person to exercise the stewardship of a major international company” obscures the more important conclusion of the UK parliament’s culture, media and sport committee on phone-hacking: that he and his son James were wilfully blind to what was going on.

Whether BSkyB, controlled by the Murdoch-owned News Corp, is a “fit and proper” owner of a broadcasting licence is a question for Ofcom, the regulator, which has now entered an “evidence-gathering” phase of its probe.

But as even the dissenting members of the committee said on Tuesday, if the “fit person” line had been omitted from the report, they would have voted unanimously to back it, including the charge that the Murdochs oversaw a culture of wilful blindness. Read more

The 1993 invention of a high-brightness, blue, light-emitting diode, which opened the way for the now-ubiquitous white LED, is often told as a tale of against-all-odds innovation by a maverick genius. When Nichia of Japan ordered researcher Shuji Nakamura to stop the expensive work on the project it had initially funded, he ploughed on. He secretly sought patents for his breakthrough. He even triggered several explosions in his laboratory.