Greetings folks and a warm welcome to the 79TH Edition of Friday Finance Weekly. Look at that, two editions in a row. Hope the rain isn’t getting everyone down.
Revised takeover offers for Australia’s Billabong International Ltd. have come in considerably lower than indicative bids, with the highest offer valuing the struggling surfwear firm at only A$287 million ($300 million), the Australian Financial Review reported. A consortium comprising Billabong’s former U.S. boss Paul Naude and private equity firm Sycamore Partners has put forward an offer of about A$0.60 per share, while a rival group made up of private equity firm Altamont Capital Partners and U.S. clothing group VF Corp has offered less than A$0.50 per share, it said. The offers are below Billabong’s share price at its last close on March 28 of A$0.73 and around half the A$1.10 initial indicative bids from both consortiums, which valued the company at A$527 million ($550 million). Since the initial offers, Billabong has posted a first-half net loss of A$536.6 million and lowered its full-year guidance, citing difficult trading conditions in Europe and a disappointing performance from its Nixon watch brand. In February 2012, Billabong rejected an A$850 million offer from TPG Capital TPG.UL as too low. Makes you wonder what Billabong was smoking (sorry I couldn’t resist). What’s next is they will evaluate their options through a liquidation scenario and make decision. Its Déjà vu – remember Groupon and Google? (Source: Reuters)
A day after the sudden exit of Lululemon’s chief product officer, the yoga-pants maker that continues to reel from the massive “sheer” pants recall last month was slapped with a downgrade to “sector perform” by RBC Capital Markets. RBC analyst Howard Tubin said the departure of Sheree Waterson brings a “new level of uncertainty to the Lululemon story. It is Ms. Waterson’s departure that is the impetus for our downgrade,” he said in a note to clients. The downgrade was from “outperform.” Tubin goes on to note that Waterson has been a “strong creative asset” to the women’s sports apparel maker since she joined the company in 2008 and has been “instrumental in the design process.” While I agree with RBC on this, the market seems to have brushed this aside as the share is up 8.19% for the week and is currently traded at $69.60. I think they should have used the sheer pants as a marketing opportunity. Perhaps launch a new line for professional.. eh.. dancers? (Source: Google Finance, Fox Business)
Toys ‘R’ Us has withdrawn its plans to go public in a move that was considered likely since its chief executive officer Gerald Storch announced plans to step down in February. In its SEC filing, the retailer stated it was pulling its initial public offering, which was first registered in May 2010, because of unfavorable market conditions and a recent management change. Storch stepped down in February, although he will remain as chairman, and the company has begun a search for his replacement. The decision to withdraw the IPO came at the same time that Toys ‘R’ Us released its fourth-quarter results, which were below the previous year. Net sales were $5.8 billion for the fourth quarter, a decrease of $155 million compared to the prior year, and net earnings were $239 million, compared to $343 million in the fourth quarter of 2011, a decrease of 30 percent. I am however curious as to know if the sales are down due to changing demographics (ie less children as our population is aging) or the lukewarm economy. Regardless, the future of entertainment is in interactive media. (Source: License Magazine)
The uber popular cross platform messaging app, Whatsapp we being courted by Google. Reports indicate that Google made a $1B offer for Whatsapp. Unfortunately they rebuffed the offer. Whatsapp currently has 250M users and the majority of users are free. They earn around $100M in total revenues annually, so Google was offering 10x revenue (a fair price). As the user base increases the infrastructure requirements will continue to increase and I am not sure if Whatsapp can cope (from a cost perspective). Google is in the best position to assist. Let’s see what the future holds. (Source: Guardian)
In March, Microsoft was fined 561 million euros (about $725 million) by the European Commission after, apparently, a programmer carelessly left out just one line of code in Microsoft’s Service Pack 1 of European versions of Windows 7. That one line would have triggered the system to offer web browsers other than Microsoft’s own Internet Explorer, which Microsoft had agreed to include to settle charges that it was monopolizing the web-browser business. Also in March, the government of Denmark said that Microsoft owed the country about a billion dollars in unpaid taxes when it took over a Danish company and tried to route its taxes through notorious tax havens such as Bermuda. According to a March Reuters report, Denmark is among the first European countries to challenge such U.S.-standard tax shenanigans and is expecting payment in full. The market doesn’t really seem to care as the shares have been stable over the last month (increase of 3%). But seriously, how did someone forget something so important? I guess this gets chalked up with history’s costliest oh crap moments. (Source: Guardian)
According to news reports in November, New York City physician Jack Berdy was doing a brisk business administering Botox injections (at up to $800) to poker players who were hoping to prevent facial expressions that might tip their hands. Accountants: This would qualify as a legitimate business expense right? (Source: Fox News)
Have a fantastic weekend and please don’t hesitate to forward this newsletter. Many thanks,