According to several sources, Microsoft (MSFT) has dropped its offer to buy Yahoo! (YHOO).
The Wall Street Journal writes that "Microsoft said it had increased its offer to $33 a share, but said Yahoo wanted at least $37 a share."
Executives at both firms had meetings several times over the last few days.
Douglas A. McIntyre
It appears that Boeing (NYSE: BA) is facing another delay for deliveries of its 787 Dreamliner and the company’s CEO is facing a major challenge to his credibility. After two significant set-backs in the delivery timetable, the firm has said it is on schedule for next year.
The German daily Die Welt writes that it has become aware of delays though letters from Boeing to customers. As Reuters points out "None of the 55 or so airlines which have bought the plane have canceled their orders, but many have said they will seek compensation for late deliveries."
Leaving aside the embarrassment to Boeing’s management, more delays on the time table could have a severe effect on the company’s earnings forecasts. Boeing’s stock has already taken a beating because of its earlier problems with the 787. It now trades at $85.69 down from its 52-week high of $107.83.
If the news is accurate, Boeing may have to adjust its financial projections. And, that will likely mean a sell-off in the company’s shares.
Douglas A. McIntyre
Sprint (NYSE: S) may have found a buyer. The interested party is German phone giant Deutsche Telekom NYSE: DT). DT owns the fourth largest cellular carrier in the US. Sprint has the third largest network, but has struggled to keep subscribers since it bought rival Nextel. The M&A action would be brilliant for both companies.
Sprint’s shares are trading at $7.81 down from $25 less than two years ago. The firm has had financial troubles because of customers losses and has fallen well behind AT&T (T) and Verizon Wireless. Combining Sprint and T-Mobile would create a strong, third competitor in the US market. It would be the largest cell operator with 50 million customers from Sprint added to 28 million of its own.
Sprint has no solution to building out a 4G network that will allow it to remain competitive a less than a decade from now. Its plans to spend $5 billion on a national WiMax grid have been slowed and perhaps killed by the company’s financial and operational problems.
Reuters points out the the German government, which still owns a third of DT might not approve a deal. But, without one T-Mobile will never be a force in the US market and Sprint will languish in the third place spot while its better-funded and better-operated competitors pull further ahead.
Douglas A. McIntyre
Late word is that the hedge fund business that Citigroup (C) CEO Vikram Pandit sold to the bank for $800 million has lost a huge amount of its value. All of the outside investors in the fund, Old Lane, hit the exits.
According to The New York Times "Citigroup said on Friday that “substantially all” outside investors redeemed their investments, leaving the fund with about $1.5 billion." Old Lane had $4.5 billion under management last summer.
The sale of Old Lane to Citi is what got Pandit in the door at the money-center bank. As CEO, his track record is short, but poor. Most of what he has done is raise money which has diluted shareholders and claim he will make huge cuts in the company’s cost base. Since the beginning of the year, Citi’s shares are down 10% while those of rival JP Morgan (JPM) are up 10%. Pandit has not sold a single one of the bank’s many unrelated assets to improve its capital base.
Citi’s board has shown bad judgment once again. It allowed Chuck Prince to mis-manage the firm and make huge gambles on mortgage-backed paper. Now it has promoted an executive who could not even manage money well for his own investors, and that will cause the bank to take another $200 million plus write-down.
Pandit has only been CEO for a brief time, but almost every sign points to the fact that he is not up to the job and needs to go.
Who should replace him? Perhaps Robert Rubin, Chairman of the Executive Committee at Citi and former Goldman Sachs (GS) co-chairman. Much of the trouble at the bank occured on his watch. Now he can help clean it up.
Douglas A. McIntyre
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