Weil's View on Finance
Hello, View fans. Here is some of what I’ve been reading this morning.
Microsoft’s deal to buy Nokia’s handset business
The Financial Times’s Lex column has a pertinent reminder in the wake of the latest deal news, in which Microsoft is buying Nokia’s handset business for $7.2 billion and Nokia’s chief executive officer, Stephen Elop, is rejoining Microsoft: “As investors wait to hear from both companies about the deal, and while the inevitable conspiracy theories abound as to whether Stephen Elop was a sleeper agent for Microsoft all along, they can at least reflect on one general lesson: joint ventures in technology are too often doomed either to fail or not to succeed as well as they could have done.”
Government solution to Nasdaq woes may be worse than the problem
Sure, the Nasdaq’s three-hour shutdown last month was a big problem. But can the Securities and Exchange Commission do anything to help? Jim McTague of Barron’s is rightfully skeptical. “There is awfulness in having the SEC jump in to micromanage the exchanges,” he writes. “The regulators, at desks far removed from Wall Street, know much less about market plumbing than do the people who run the system.”
The perils of aging pipelines
From Mike Lee of Bloomberg News: “Cristobal Sustaita didn’t know about the pipeline running underground near his West Texas home until it erupted into a fireball in 1976, burning to death five people including his wife and 20-month old son. The explosion was one of the first to focus attention on a lethal welding flaw in U.S. pipelines built before 1970. In the decades since, this type of pipe has continued to leak, rupture and explode, killing more people, despite repeated warnings to the industry from federal investigators and private consultants.” It could cost $50 billion to replace all of the old pipes, which helps explain why the problem hasn’t been fixed.
Vodafone’s big sale to Verizon
The Wall Street Journal’s Heard on the Street column says “Vodafone has been paid more than fairly in the deal,” in which it’s receiving $130 billion for its 45 percent stake in Verizon Wireless from Verizon Communications. “Shareholders should also be pleased with how Vodafone is spending the proceeds: on them. Some 71% of the deal consideration will go straight to shareholders, including all the Verizon shares and $23.9 billion of the $58.9 billion in cash Vodafone receives.”
The New York Times columnist reviews an upcoming book by Duff McDonald about the consulting firm McKinsey & Co. and asks why its advice so often has turned out so bad: “It told AT&T in 1980 that it expected the market for cellphones in the United States in 2000 would amount to only 900,000 subscribers. It turned out to be 109 million. The list goes on.”
(Jonathan Weil is a Bloomberg View columnist. Follow him on Twitter.)