Smackdown in PennsylvaniaShrugging off an ad blitz by Barack Obama in the latest do-or-die primary, Senator Hillary Clinton posted another victory, besting her fellow Senator by 9.2 percentage points in Pennsylvania. Clinton racked up commanding leads with her core constituencies of working-class whites, older voters, and women, bolstering her case for staying in the race. But she gained little ground in the all-important battle for delegates, and it will be virtually impossible for her to top him on that score in the contests remaining between now and June 3. As the race moves on to May 6 votes in North Carolina and Indiana—many consider the Hoosier state her next must-win test—Obama also retains a huge funding lead.
See "Will Pennsylvania Win Fill Clinton Purse?"Yahoo! Looks HealthyOver to you, Microsoft (MSFT). Yahoo hit its targets on Apr. 22, reporting $1.82 billion in revenues and profits of $542 million, better than consensus expectations. But the dandy results failed to impress Microsoft CEO Steve Ballmer, who indicated he has no plans to raise his takeover bid, now valued at roughly $43 billion. On Apr. 23, Apple (AAPL) also reported numbers that handily beat expectations.
See "Are Yahoo's Earnings Good Enough?"Take That, Les!It's a typical feud in Sumner Redstone's fractious corporate family. On Apr. 21, Viacom's (VIA) Paramount studio said it would bolt from the Showtime movie channel, owned by sister company CBS (CBS), to start its own in 2009. CBS, run by one-time Viacom Co-President Les Moonves, had pushed Paramount, MGM, and Lionsgate (LGF) to take a lower fee to extend their deal to play their movies on Showtime. Instead, the three studios opted out. Starting a new channel won't be easy: The major cable and satellite companies are saving slots for high-definition channels and other services, prompting some analysts to wonder if the studios' threat doesn't amount to a negotiating ploy between siblings.Swiss Self-CriticismIn an unusual move, banking giant UBS (UBS) released a report on Apr. 21 that spells out how it lost a tidy $38 billion in the credit markets. UBS mostly blames its investment bank rather than Dillon Read Capital Management, the internal hedge fund that it closed in May, 2007. Traders in the investment bank had access to cheap funding and used it to buy and hold subprime-mortgage-backed securities that they thought bore little risk.Banks in the SoupEarnings season brings us another round of really bad news from the titans of finance. The subprime mess wreaked havoc on first-quarter numbers from the likes of Citigroup (C), Merrill Lynch (MER), Bank of America (BAC), and JPMorgan Chase (JPM). Chase took $5.1 billion in write-downs and provisions, while Merrill wrote off $9.7 billion. BofA's profits fell 77%. Midsize banks were also caught in the tailspin, with black ink at SunTrust (STI) shrinking by 44% and National City (NCC) agreeing to sell $7 billion in shares to Corsair Capital at a steep discount, a move that sent Nat City stock down 28% on Apr. 21. The next day, Royal Bank of Scotland (RBS) said it would sell $24 billion in new stock to its shareholders.
See "Bank of America: Disappointing Profits"A British BailoutWe won't do it! We won't do it! Well, O.K., maybe we will. The Bank of England ended days of speculation on Apr. 21 by unveiling a $100 billion plan to allow banks to swap mortgage-backed paper for government bonds in a bid to boost liquidity in the credit markets. That amounted to a U-turn for the BoE, which had taken a harder line than the Federal Reserve on helping cash-starved banks. Critics warned that the move wouldn't speed lending activity anytime soon.Ciao, AlitaliaAir France-KLM (AKH) left Alitalia at the gate, announcing on Apr. 21 that it was walking away from its takeover bid. The Franco-Dutch carrier had offered $220 million for the Italian government's controlling stake in Alitalia, but talks broke down over plans to lay off more than 2,100 employees. Alitalia, which loses $1.6 million a day, got a $478 million emergency government loan on Apr. 22, but its future looks cloudy.Hour of the ScavengersFunds that feast on troubled companies' assets have long been with us. But these days, such vultures have much more cash and clout, and their style of investing is regarded as more mainstream. Harbinger Capital's Phil Falcone is at the vanguard of a flock buying everything from beaten-down bonds to big blocks of stock in iconic companies like The New York Times (NYT).Did Craigslist Dilute?Craig Newmark, founder of much-loved online classified ad site Craigslist, has insisted from the beginning that the privately held outfit is about building community, not profits. But on Apr. 22 online giant eBay (EBAY) sued Craigslist's board, accusing it of diluting the 28.4% stake eBay acquired in 2004 by 10%. Craigslist says it did no such thing.Samsung's Lee ExitsWill South Korea's biggest conglomerate ring in a new era of better governance? Samsung Group Chairman Lee Kun Hee, days after being charged with tax evasion and breach of fiduciary trust, on Apr. 22 said he was stepping down from all posts including chairman and co-CEO of Samsung Electronics. Other top brass at the "control tower" Strategic Planning Office will resign, too, but it seems unlikely that Lee's founding family will loosen its iron grip on the chaebol.
See "Scandal-Plagued Samsung Chairman Quits"Compromised Pundits?Retired military officers turned opinion-mongers are ubiquitous on network television and cable news shows these days. Yet are they serving up unbiased analysis or taking marching orders from the Pentagon? In recent years, scores of them have attended private briefings with Defense Dept. brass and coordinated with the Pentagon's public-affairs types. More questionable, these officers often work as lobbyists and consultants for defense companies with big financial stakes in the direction of U.S. strategy in Iraq and Afghanistan. (The New York Times)Oil Through the RoofHo-hum: Another day, another record for oil prices. Light sweet crude futures closed north of $119 in New York on Apr. 22. Supply snafus are the biggest factor. For example, rebel attacks in Nigeria forced Royal Dutch Shell (RDS) to cut 170,000 barrels per day there. The dollar's new low against the euro on Apr. 22 didn't help. In the U.S., on the other hand, gasoline prices that hit a record of $3.50 this week seem to be crimping Americans' profligate driving habits.More Mileage, PleaseIt took quite a while, but the Bush Administration is turning up the heat on carmakers. The Transportation Dept. on Apr. 22 proposed rules saying that by 2015 automakers must boost the average passenger-car fuel economy from the current 27.5 mpg to 35.7. Trucks would have to hit an average of 28.6, up from 21.7 mpg today. Analysts say the rules would boost the cost—and possibly prices—of cars by at least $2,000 each. Auto executives say it could be $6,000.The Heparin ControversySomething is rotten in the production of blood thinner heparin, but the U.S. and China can't agree on who's to blame. The FDA says contaminated heparin from China has turned up in 11 countries and is implicated in as many as 81 deaths. But the Chinese say the contaminant hasn't been proved to cause allergic reactions and that the true cause lies within the U.S. On Apr. 22, Chinese health experts visited a Baxter International (BAX) plant where heparin is made.Change at the JournalThe news shocked the newsroom: On Apr. 22, five months after Rupert Murdoch's News Corp. (NWS) bought The Wall Street Journal from the Bancroft family, the paper's top editor, Marcus Brauchli, resigned. Dow Jones says it is searching for a successor. Under Murdoch, the Journal has been remaking itself rapidly, featuring more general-interest and political news, with a glossy lifestyle magazine in the works. Murdoch also struck a tentative deal with Tribune Co. (TXA) to buy Long Island-based Newsday for $580 million.
See "Top Editor Quits the Journal"Chicago FinancierOver the years, many banks and investment houses have striven to turn themselves into financial supermarkets. The lofty goals have proved elusive in most cases. As BW Chicago reports, James Tyree, chairman and chief executive of Mesirow Financial, is flourishing by offering aisles of service to every potential customer. His secret: Stay local and private. Tyree overcame poverty to build his company, which now boasts $35billion under management. But the work almost killed him—twice.