Companies in the news ... and how they were assessed
Yahoo/verizon: ancient history combo
When former Google exec Marissa Mayer (pictured) arrived to run Yahoo four years ago, she was greeted with posters of her face emblazoned with the word “Hope”, said Leslie Hook in the Financial Times. But that hope – that she would transform the fading 1990s internet star – has since been dashed. Worth $125bn at its peak in 2000, Yahoo was this week sold to Verizon, the US’S largest mobile operator, for $4.8bn, in a deal that excludes its most valuable asset: a $30bn stake in the Chinese e-commerce giant Alibaba. “Mayer was hired at a handsome price to provide clarity of vision and to restore Yahoo’s brand,” said The Economist. But she failed to resolve the issue of the firm’s “split personality”: is it an entertainment company, or a tech one? She overspent on “splashy deals” (most of the $1.1bn spent on social network Tumblr has been written down); and she couldn’t halt the decline in Yahoo’s core online advertising business. Verizon reckons it can tempt in more advertisers by “meshing” Yahoo with AOL, another piece of “ancient web history” which it bought last year, said Jennifer Saba on Breakingviews.com. It’s an “appealing idea” – Yahoo’s search and advertising businesses “could play well” with AOL assets such as The Huffington Post – but it’s still a long shot. Mayer, who has faced a barrage of criticism, has complained about “gender-charged” reporting. On course for a $55m pay-off if she leaves within a year of the sale, she is not expected to go to Verizon.
BT Openreach: reprieved
A week after BT was lambasted by MPS for “significantly underinvesting” in its broadband network, Ofcom has enraged the company’s rivals by rejecting calls for it to be broken up, said The Daily Telegraph. BT will not have to sell its Openreach infrastructure division – which has left millions of consumers with sub-standard connections. However, Openreach must now be run as a legally separate company with its own board and articles of association that give directors a duty to serve the network’s customers. Sky, Vodafone and Talktalk have long claimed that BT has stymied them by dragging its heels on opening up its network. Ofcom chief Sharon White said the new arrangement should allay these concerns – but warned that Openreach could yet be split off if BT failed to make it more independent. That “BT dodged this bullet” was, as White admitted, largely down to practicalities, said Dominic O’connell on BBC News online – notably, complications with land deals and BT’S giant pension scheme. “Creating two new pension schemes, with the risk of weakening the financial resources of one or the other, might be too hot a political potato, even in the pursuit of faster broadband.” And its rivals are not happy. “BT has proven itself expert at gaming this system,” said Dido Harding, Talktalk boss. “There is nothing to suggest they will not continue to do so.”
HSBC: dramatic arrest
US prosecutors have upped the stakes in their battle against market riggers by arresting HSBC’S global head of forex cash trading, said Harry Wilson in The Times. Mark Johnson, a Briton, was detained by FBI agents at JFK airport last week on charges of conspiracy and wire-fraud. Another former HSBC forex trader, Stuart Scott, faces extradition. The pair are accused of making some $8m by “front-running” a big currency trade in 2011, said Martin Arnold in the FT. Specifically, they are alleged to have “cheated” a client, the UK oil and gas group Cairn Energy, by buying pounds ahead of the firm’s purchase of $3.5bn-worth of sterling, knowing the exchange rate would spike once it had gone through. A Cairn advisor smelt a rat, but when HSBC conducted an inquiry into the incident, it found nothing wrong. Both men deny the charges, and HSBC may support them, said Aimee Donnellan in The Sunday Times. But the case is “another fine mess” for a bank already revealed to have laundered money for Mexican drug cartels, and helped thousands of clients dodge taxes in Switzerland. Hopes of an end to the days of “firefighting scandals” look forlorn.
William Hill: just say no
“The gambling industry is obsessed by deals,” said Nils Pratley in The Guardian. But William Hill should steer well clear of Rank and 888 Holdings’s proposal that it “join a three-way mashup”. Following the ousting of its underperforming boss, James Henderson, the bookie “has enough headaches” already. Quite so, said Patrick Hosking in The Times. Three-way deals are so tricky to achieve that “one wonders whether this is anything more than a fantasy wheeze from an opportunistic investment banker” who has noticed that the “rudderless” William Hill is looking “a bit vulnerable”.