Everyone likes to feel a little warm and fuzzy on the first day of a public listing. That’s why IPOs are traditionally priced slightly below demand, guaranteeing a nice first-day “pop”. But a look at first-day price changes shows something surprising: the first day pop has actually fallen over the past 20 years:
Some companies want the good publicity of a rising share price. But as Lex has pointed out this also means companies are losing out on potential fundraising. Over the past decade, the total positive change in companies’ market cap during their first day of listing was $27.7bn. The total negative change (for companies whose share price fell on their first day) was just -$1.5bn, according to data compiled from Capital IQ. That’s more than $26bn in net lost proceeds to the companies. Not exactly a reason to pop open the champagne.
So Cisco is laying off 6,000 people. But will headcount actually go down? Cisco says no: The layoffs won’t cause a net reduction in jobs because it will still be hiring people. Forecasts about workforce changes are rarely accurate, anyway — as a glance at the past few years shows. Here’s a chart of what Cisco said would happen in its August earnings calls each year, versus what actually happened:
Last week, we pointed out one of the most exquisite slides we had seen all year in an investor presentation. Simply by spinning off its copper and fiber assets into a REIT, the telecom company Windstream believed its stock would rocket by 73 per cent. Alas, it is only up 7 per cent since then.
On Monday, Kinder Morgan, remarkably, came up with the mirror image set of slides. Kinder would consolidate its empire of natural gas pipelines by dissolving its tax-advantaged master limited partnership (MLPs are analogous to its REITs in that they don’t pay corporate level tax). It would also consolidate all companies into a regular old corporate tax-paying C-corporation. Read more
Big, high profile M&A deals get the fattest headlines and fattest fees. But are there enough of them to sustain an M&A advice business?
Here are two slides from a recent investor presentation from Greenhill & Co., a publicly-traded boutique investment bank, on the topic (click to enlarge): Read more
Management reshuffles, shareholder dissent, worries about credit quality: lots of things have contributed to the 22 per cent slide in Standard Chartered’s share price over the past 12 months.
To that, add one more from today’s first half results: new regulatory worries, in the form of more talks with New York regulators that could lead to another fine. Read more
On Tuesday, Lex highlighted the explosion in US-based pure play print media companies. Here’s the list we compiled of publicly-traded or soon-to-be- publicly-traded, sorted by 2013 revenue.
Last week, Lex analysed the curious case of Windstream, the US telecom company that was spinning off its copper and fibre network into a tax-advantaged real estate investment trust (REIT). One slide in their investor presentation succinctly details the maths that justifies the deal.
Super Mario may hop and skip over various obstacles, but Nintendo has its feet rooted. It has stuck with the hardware model, which means game prices remain high to cover those costs. After luring in parents with its family-friendly Wii packages, it now alienates them.
Value investors have bought into the hope that Nintendo, like its game characters, can bounce back. The shares have climbed despite three years of negative operating cash flow and dividends down over 90 per cent since March 2010. This has been helped by a weaker yen (boosting the translation of overseas sales). But the share price has trailed well behind the Topix over the past few years, by 61 percentage points. Read more
As the market waits for ‘Level 3 sectoral sanctions’ against Russia…
Has anyone noticed how the respective share prices of BP and Total have already performed versus the MSCI World Energy this year? Read more
We asked the question, when looking at the $3bn CIT/OneWest deal this week, if bank M&A is finally back. As you are reading the Lex note, think of the following chart, based on Dealogic data, to see just how staggering the falloff in activity has been.