Caterpillar: A $7.6 billion commodities bet
Caterpillar, the world’s largest maker of construction equipment, is betting big that the worldwide commodities boom will last, said Hal Weitzman in the Financial Times. The company agreed this week to pay $7.6 billion to acquire mining equipment maker Bucyrus International, and Caterpillar will even move its mining equipment division to South Milwaukee, Wis., Bucyrus’ headquarters. Caterpillar plans to capitalize on strong demand for commodities—including coal, iron ore, and bauxite—driven by rapid industrialization in China, India, and other developing countries. The deal “will accelerate the pace of Caterpillar’s expansion into the mining sector,” which began last summer when the company announced plans to make “a full range of mining shovels for the first time.”
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Publishing: Newsweek’s beastly deal
Newsweek and TheDailyBeast.com have agreed to merge, creating a hybrid of financially troubled print and online publications, said Nat Ives in AdAge.com. Stereo equipment tycoon Sidney Harman, who bought Newsweek in August for $1, and IAC/InterActiveCorp., headed by Barry Diller, will jointly own the combined publication; it will be edited by The Daily Beast’s Tina Brown, who previously edited Talk, The New Yorker, and Vanity Fair. Newsweek.com’s 6.2 million monthly visitors will be redirected to TheDailyBeast.com, which pulls in less than half that traffic. Newsweek is losing $30 million a year, and TheDailyBeast.com, $10 million. But Brown, “a master of buzz,” should help draw advertisers “looking to share the spotlight.”
Tech: Cisco’s worrisome sales warning
Cisco, the leading maker of Internet routing equipment, spooked stock investors last week when it warned of a sales slowdown, said Eric Savitz in Barron’s. Although the company reported “decent” earnings of $1.9 billion on sales of $10.75 billion in the fiscal quarter that ended Oct. 31, CEO John Chambers said the company had hit an “air pocket.” The culprit was a 48 percent drop in orders from state governments. Cisco’s stock plunged 17 percent the day after Chambers spoke, losing $23 billion in market value.
Investigations: Hedge fund star under scrutiny
The U.S. has opened criminal and civil investigations into hedge fund Harbinger Capital and its founder, Philip Falcone, said Jenny Strasburg in The Wall Street Journal. At the crux of the investigations is $113 million that Falcone borrowed from Harbinger to pay personal income taxes in late 2009, at a time when Harbinger clients were barred from making withdrawals. The loan wasn’t disclosed until March 2010. Falcone, whose main fund is down 15 percent this year, has denied wrongdoing.
The economy: Retail sales gather strength
Retail sales, “closely watched by investors and economists for signs of whether the economy is growing or shrinking,” posted their fourth consecutive gain in October, rising 1.2 percent from September, said Jeffry Bartash in Marketwatch.com. Sales rose 6.3 percent in the three months from August through October, compared with the same period last year, easing “concerns about the U.S. sinking back into recession.”