Mergers: Two big deals signal rebound
Two multibillion-dollar corporate acquisitions touched off a roaring stock market rally, said Lynn Thomasson in Bloomberg.com. That’s because the deals provided fresh “evidence that mergers and acquisitions are rebounding from the slowest pace in six years.” Investors bid up shares of Affiliated Computer services, which Xerox will buy for $6.4 billion. The company is making a strategic shift “to computer services as sales of its traditional printing equipment decline.” And shares of Abbott Laboratories advanced on word that the company would buy the pharmaceutical unit of Belium’s Solvay for $7 billion.
Investors celebrated because they see the deals “as a sign of corporate confidence” returning to the market, said Alexandra Twin in CNNmoney.com. Merger-and-acquisition activity dried up almost entirely after the collapse of Lehman Brothers and AIG last September. News of the acquisitions, coupled with recent deal activity by Disney, Dell, and Kraft Foods, has convinced many investors that the economy has finally turned the corner. “It’s always good news when you see money coming into the market,” said money manager Hugh Johnson.
The Week
Escape your echo chamber. Get the facts behind the news, plus analysis from multiple perspectives.
SUBSCRIBE & SAVE
Sign up for The Week's Free Newsletters
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Join more than 350,000 subscribers and keep yourself informed with a selection of The Week’s most interesting, enlightening and entertaining stories - plus daily puzzles.
Latest Videos FromThe Week
Games: Nintendo cuts the Wii price tag
Under pressure from rivals, Nintendo last week cut the price of the
Wii game console to $199 from $249, said Brendan Sinclair in
ZDNet.com. Sony and Microsoft earlier this year cut the prices of their Playstation 3 and Xbox Elite consoles to $299. The cuts are aimed at boosting “hardware sales that have been slipping since February.” The slippage has hit Nintendo harder than its competitors, yet the company until now had resisted price cuts, holding firm since the console’s November 2006 debut.
Publishing: Cutbacks coming at Condé Nast
Pampered staffers at Condé Nast will soon have to tighten their belts, said John Koblin in The New York Observer. The publishing giant’s management has largely accepted the recommendations of consultant McKinsey & Co., brought in to analyze the company’s magazines, including Vanity Fair, Vogue, and Glamour. McKinsey has recommended cutting expenses by about 25 percent, and “layoffs are now seen as inevitable.” The New Yorker, a Condé Nast title that “has been meticulously cutting from its budget throughout the past year,” is reportedly exempt from the reductions.
Movies: Weinsteins nearly tapped out
Despite the success of Inglourious Basterds, starring Brad Pitt and directed by Quentin Tarantino, independent studio Weinstein Co. is running out of cash, said Lauren Schuker in The Wall Street Journal. The company, founded in 2005 by brothers Harvey and Bob Weinstein following their bitter split from Disney’s Miramax Pictures, “has burned through most of the roughly $1.2 billion raised for its launch.” Several independent studios have closed in recent years, “as film financing has dried up and audiences’ tastes have shifted.”
Litigation: Trustee targets Madoff family
The trustee sorting through Bernard Madoff’s finances says his two sons knew about his Ponzi scheme and are harboring ill-gotten gains, said Zachery Kouwe in The New York Times. Trustee Irving Picard plans to sue Mark and Andrew Madoff, as well as Bernard’s brother Peter and niece Shauna, for $198 million. All four were officers of Madoff’s investment firm. None of the four had any comment, but Mark and Andrew have repeatedly asserted their innocence.
