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Herbalife: the ultimate financial plaything

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Apple and Exxon may not be so different, after all

Unlikely bedfellows

Apple and Samsung shouldn&rsquo;t expect the earnings bandwidth for smartphones to keep growing much longer. The number of advanced handsets sold last year grew an incredible 43 per cent to 700 million. They now account for more than two-fifths of the otherwise stagnant cellphone market, according to Strategy Analytics.

Tick tech

Facebook deserves the benefit of the doubt about its rocketing costs. The social network&rsquo;s bills jumped about 80 per cent in the fourth quarter. That&rsquo;s worrying - it&rsquo;s twice as much as the top line grew. But all-important mobile advertising revenue doubled in 90 days. The potential profit justifies heavy investment.

Small screens, fast growth

Hewlett-Packard&rsquo;s turnaround is suddenly running low on ink. The $29-billion tech company&rsquo;s PC and imaging businesses are in decline. Investors had counted on IT services to print better numbers while HP tries to fix the rest of itself. But the company now thinks the unit&rsquo;s revenue will fall up to 13 per cent in the financial year ending October 2013. Chief Executive Meg Whitman&rsquo;s turnaround task just got tougher.

Black ink running low

Hewlett-Packard&rsquo;s $8.8-billion Autonomy trouble was sown by the company&rsquo;s long history of dysfunction. HP blames accounting improprieties at the UK software company it bought for $11.7 billion last year for the majority of the writedown it was forced to take in its earnings report on Tuesday. But HP, facing declining businesses and boardroom disarray, was too eager to do a deal. Chief Executive Meg Whitman may be wondering what else can go wrong.

Making your own luck

If Apple becomes Microsoft, investors should cheer. At least, that is, for their wallets. Middle age for technology stocks can hurt, as shareholders looking for rapid growth lose interest and value-oriented owners await stability. But Apple has already made the transition &mdash; before its growth has slowed much. Even if its next decade echoes Microsoft&rsquo;s last, the company is worth over $1 trillion.

Dried Apple

Apple is taking the tablet fight to Amazon. The Cupertino tech company&rsquo;s new iPad mini takes it closer to the price point for the online retailer&rsquo;s devices. The new hardware rivalry could pressure Amazon into price cuts.

Hey ladies

Is everything sacred in Canada? At first, it was a hole in the ground. Then, it was the stock exchange and a DIY chain. This week, regulators blocked two more big deals, including a $5.2-billion bid for Progress Energy by Petronas of Malaysia. Taken as a whole, these actions signal the market for corporate control in Canada &mdash; especially when it comes to foreign buyers &mdash; is effectively closed.

Hands off, eh

Google&rsquo;s hardware ambitions are proving surprisingly costly. The search giant paid $12.5 billion for Motorola&rsquo;s handset business. The division lost another $527 million in the third quarter and the mistaken early release of unexpectedly weak earnings knocked over $20 billion off Google&rsquo;s market capitalization in (Thursday) afternoon trade. A bigger concern is the risk of long-term management distraction.

Oops

Groupon&rsquo;s melodrama is discounting dual-class share structures. Chief Executive Andrew Mason and Chairman Eric Lefkofsky appear locked in a dysfunctional battle over how to run the flailing company. The board is keeping Mason at the helm, but the fighting probably isn&rsquo;t over. Super-voting shares like the ones both men own are meant to give founders flexibility. But Groupon is a reminder of just how dangerous the arrangement can be.

B-class drama

Pharma has landed a double blow against the American government. The US Court of Appeals in New York has ruled that a drug salesman was exercising his right to free speech by pitching a narcolepsy drug as effective against insomnia, chronic fatigue and other conditions the Food and Drug Administration had not approved. If the Supreme Court upholds this decision, companies will pay fewer multi-billion dollar fines and useless healthcare spending will increase.

Bad prescription

Congress should push for mandatory gun insurance. Firearm ownership is a US constitutional right. But as last week&rsquo;s massacre again demonstrated, it comes at a cost. Requiring liability coverage could be one way to keep the most dangerous weapons from unstable hands without infringing the law.

Second way forward

Hewlett-Packard has finally admitted a bit of reality. The $29-billion technology firm, beset by board and executive dysfunction despite its place in Silicon Valley history, has been adamant that splitting up would be a mistake. But in its new annual report, HP says it may sell assets or dispose of them through other means such as joint ventures. It&rsquo;s a no-brainer for the board to consider a breakup. After all, the stock is trading far below the value of the company&rsquo;s parts.

Hard to do ? but logical

Google evaded the Feds but won&rsquo;t so easily do the same with rivals. The US Federal Trade Commission&rsquo;s extensive antitrust probe into the dominant search engine ended with a whimper: the company promises to behave. The government&rsquo;s case always looked shaky. If it couldn&rsquo;t nail Microsoft, Google was a pipe dream. Just as well. For now, it&rsquo;s still a problem for the market to sort out.

404 not found

Facebook&rsquo;s creativity isn&rsquo;t too destructive yet. The social network on Tuesday unveiled a tool that allows users to find people, photos and interests more easily. It should make Facebook&rsquo;s site stickier and could eat into Yelp, LinkedIn and IAC. But the search results will still be limited and there&rsquo;s no clear revenue windfall.

Search and destroy

A $20 billion leveraged buyout of Dell is too big for one buyout firm alone. And club deals are infamous &mdash; think the troubled $45 billion buyout of TXU in 2007. Moreover, the computer maker&rsquo;s shrinking business doesn&rsquo;t look that attractive. But an LBO could still deliver high returns because, unlike credit bubble-era targets, Dell is cheap.

Big but cheap

Microsoft shows why tech cash piles should be valued at a discount. The software giant might put up $3 billion to fund a leveraged buyout of Dell, according to CNBC. Sure, the PC maker is cheap and Microsoft&rsquo;s investment record isn&rsquo;t bad. But a Dell financing would divert money that could be returned to shareholders to plug holes and postpone obsolescence.

Broken fingers

Apple has finally succumbed to uncreative destruction. A five-year run with the iPhone and iPad catapulted the company to investment royalty, but it&rsquo;s coming to an end. Over $50 billion of market value - nearly the equivalent of HP and Dell combined - vaporized in the hours after Apple reported flat fourth-quarter profit. Copycats are gaining and margins are shrinking. Chief Executive Tim Cook needs a real innovation to escape this Red Queen&rsquo;s race.

Curiouser and curiouser

Apple&rsquo;s iPhone 5 offers subtle and sublime charms. The unveiling of the company&rsquo;s latest handset may have been a bit of a snooze. Better isn&rsquo;t as exciting as new. But throw in improved software and it&rsquo;s enough to be a big hit with consumers &mdash; and Apple investors, too.

Robert Cyran