Berkshire Hathaway: Buffett’s new headache
The Sage of Omaha suddenly has some tarnish on his halo. Berkshire Hathaway CEO Warren Buffett last week accepted the abrupt resignation of David Sokol, a senior Berkshire executive widely seen as Buffett’s heir apparent, said Gina Chon and Serena Ng in The Wall Street Journal. Sokol, 54, resigned after news broke that he owned about $10 million in Lubrizol shares when he recommended to Buffett that Berkshire acquire the chemicals company. Berkshire recently completed a $9 billion deal for the company, giving Sokol a profit of almost $3 million. Buffett has said he believes Sokol did nothing wrong, but the Securities and Exchange Commission is examining the transaction to see if insider-trading laws were broken.
“It’s possible that there’s an innocent explanation” for Sokol’s actions and Buffett’s inaction, said Joe Nocera in The New York Times. But the whole thing looks fishy. When Sokol urged Buffett to acquire Lubrizol, he mentioned—“in passing,” he says—that he owned shares in the company. “Inexplicably,” Buffett raised no objection to Sokol’s pushing a deal he stood to gain from personally. Buffett once said, “It takes 20 years to build a reputation and five minutes to ruin it.” Did he forget his own lesson?
Takeover: Nasdaq wants the NYSE for itself
Nasdaq, operator of the largest electronic U.S. stock market, has entered the bidding to buy the New York Stock Exchange, said the Associated Press. Nasdaq’s $11.3 billion offer for the iconic stock exchange tops Deutsche Börse’s $9.5 billion offer. Nasdaq is bidding in tandem with IntercontinentalExchange (ICE), which has emerged since 2000 as one of the largest trading platforms for energy and derivatives in the U.S. Should Nasdaq and ICE prevail over Deutsche Börse, Nasdaq would take over the NYSE’s stock-trading business, while ICE would run its derivatives arm.
Antitrust: Microsoft aims to cut Google down to size
Microsoft last week asked European regulators to investigate Google for possible antitrust violations, said Aoife White and Dina Bass in Bloomberg.com. The software giant charged Google with using its 95 percent share of the European search market to starve other search firms of advertising revenue. Among other things, Microsoft said, “Google bars rivals from search boxes on websites” and “blocks phones running Microsoft’s operating system from working properly with YouTube,” a Google subsidiary. Google said it would be happy to discuss its business practices with regulators.
Markets: Oil tops $108
The price of high-grade Texas crude oil reached $108 a barrel, as traders continued to worry that Mideast unrest would disrupt world supplies, said Claudia Assis and Steve Gelsi in MarketWatch.com. Oil prices have risen more than 18 percent since Jan. 1, and analysts predict that a strengthening economy will continue to put pressure on tight supplies. “Economic growth is being translated into increased demand for crude,” JPMorgan Chase told its customers.
Jobs: Latest report hints at lasting recovery
The U.S. economy added 216,000 net jobs in March and the unemployment rate fell to 8.8 percent, “prompting President Obama to proclaim a corner finally turned,” said Michael Powell in The New York Times. Democrats in Congress seized on the improving jobs picture to argue that the recovery is now well underway. The Democrats argue that their tactics, including stimulus spending and a payroll-tax cut, are creating jobs, and that planned Republican spending cuts would undo their progress.