KKR/Chesapeake Energy: A $250 million partnership
Private equity firm KKR (KKR) and Chesapeake Energy (CHK), the second-largest U.S. natural-gas producer, are joining forces to buy interests in oil and gas royalties. They will offer property owners cash upfront, even before they’ve ascertained how many barrels lie under the ground. In exchange, the two firms will get rights to owners’ future shares of production revenue. KKR will commit an initial $225 million, and Chesapeake will provide $25 million in addition to finding, acquiring, and managing the investments. This is Chesapeake’s first partnership that will acquire royalties, rather than a direct interest in fields. KKR’s move is part of a push by private equity firms to make more energy investments.
IBM: Watson goes to Wall Street
IBM’s (IBM) Watson computer, which beat champions of the quiz show Jeopardy!, will soon be advising Wall Street on investment risk, portfolios, and clients. Citigroup (C) has signed up to be Watson’s first financial services client. The supercomputer will help analyze customer needs and process financial, economic, and client data to advance and personalize digital banking. IBM expects Watson to generate billions in new revenue by 2015 and has already sold the computer’s services to health-care clients.
Pandora Media: Investors stream away
Shares of Internet radio pioneer Pandora Media (P) plunged as much as 24 percent on March 7 after the company’s first-quarter forecasts fell short of analysts’ expectations. While sales in the quarter ending Jan. 31 rose 71 percent, to $81.3 million, the company warned that revenues will be lower—between $72 million and $75 million—in the current quarter. At the same time, Pandora is facing growing expenses as it hires more ad sales people and programming costs rise to support its growing number of listeners.
Wind-Power Companies: Abandoned by VCs
American wind-power companies are finding it increasingly difficult to attract venture capital. U.S. investments in turbine farms and wind-energy businesses tumbled 38 percent last year, to $9.7 billion, compared with 2010, and venture capitalists have practically left the sector altogether. Wind power requires large cash outlays to get off the ground. But there’s now a glut in wind turbine production in the U.S., Europe, and Asia thanks to investments over the past half decade, when wind technology was still a hot sector.
Boeing: A new China partnership
Boeing (BA) and the state-owned Commercial Aircraft Corp. of China, known as Comac, will jointly fund a research center in Beijing to study ways to reduce fuel use and emissions. The tie-up should bolster Boeing in China, the world’s fastest-growing aviation market, and may also help Comac develop its C919, the nation’s first large passenger jet. Canada’s Bombardier is also in talks with Comac to share features between the C919 and its own planned CSeries, both of which will compete with Boeing’s 737.