Experience Vlerick Day - Wouter De Maeseneire

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Experience Vlerick Day - Wouter De Maeseneire

  1. 1. FINANCE IN THE NEWSJUNE, 2013
  2. 2. © Vlerick Business SchoolUSUALLY PEOPLE DO NOT LIKE FINANCE So I need to start with telling them aboutappealing and hotly debated topics like…2
  3. 3. © Vlerick Business SchoolLargest company ever according to market cap!3 |Jump of $ 50 bio!!
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  5. 5. © Vlerick Business SchoolDo you see the link?5 |
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  8. 8. © Vlerick Business School #experiencevlerick8http://business.time.com
  9. 9. © Vlerick Business SchoolIMPORTANCE OF SOUND FINANCIAL MANAGEMENT What is the goal of a company? Liquidity Profitability Solvency Let me prove this General Motors, Eastman Kodak, LehmanBrothers, Enron, Worldcom, Chrysler,… Nokia, Sony, TomTom,…9
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  11. 11. © Vlerick Business SchoolMGM FILES FOR BANKRUPTCY, BUT JAMESBOND MAY RETURN IN 2012"New James Bond films may be released every second year starting in November 2012,MGM said. It aims to own 50 percent of Bond 23, due out that year, with an equal partnerpaying all of the production costs, it said. Later Bond movies would be wholly owned andfunded by MGM..."11
  12. 12. © Vlerick Business SchoolTHE HOBBIT12"MGM estimated its total obligations to "The Hobbit" are $265 million to $275 million. Thecompany said it is looking for "a third party" to fund those obligations. Its investment stakewould be $40 million while the rest would be funded by a lender..."
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  18. 18. © Vlerick Business SchoolLARGEST BANKRUPTCIES18
  19. 19. © Vlerick Business SchoolSTOCK MARKET EVOLUTION (S&P 500)#experiencevlerick19
  20. 20. © Vlerick Business SchoolSTOCK MARKET EVOLUTION (EUROSTOXX 50)#experiencevlerick20
  21. 21. © Vlerick Business SchoolTENTATIVE SIGNS OF RECOVERY: REAL GDPGROWTH (EUROSTAT)21
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  23. 23. © Vlerick Business SchoolHEADS OF EUROPE BACK BROAD PLAN TORESCUE GREECE (NEW YORK TIMES - JULY 21, 2011)23The pact, negotiated in Brussels, is part of a rescue package of 109 billion euros, or $157billion, for Greece, the most troubled economy in the euro zone. It will force many investors inGreek debt to accept some losses on their bonds.Under the plan, Greece would receive assistance in several ways. Holders of short-termobligations would be able to swap their notes for debt with longer maturities and backed byhigh-rated bonds. An organization that includes most major European banks said its memberswould accept the offer and expected 90 percent of all Greek bonds to be exchanged.Separately, officials said that the terms of the aidpackage from Europe to Greece would beeased, with maturities lengthened to 15 years from7.5 years, at an interest rate of a quite low 3.5percent.The euro zone leaders would give wide-ranging newpowers to the region’s rescue fund, the EuropeanFinancial Stability Facility, by allowing it to buygovernment bonds on the secondary market and tohelp recapitalize banks — which might be neededwhen they write down the value of their Greekbonds.
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  26. 26. © Vlerick Business SchoolSOVEREIGN DEBT CRISIS –NOVEMBER, 28 201126
  27. 27. © Vlerick Business School15.000.000.000.000 USD!!!http://usdebt.kleptocracy.us27
  28. 28. © Vlerick Business SchoolS&P DOWNGRADES U.S. TO AA+ - WERE TIEDWITH BELGIUM!Officials at ratings firmStandard & Poors said U.S.Treasury debt no longerdeserved to be consideredamong the safest investmentsin the world. S&P removed forthe first time the triple-A ratingthe U.S. has held for 70 years,saying the budget deal recentlybrokered in Washington didntdo enough to address thegloomy long-term picture forAmericas finances. Itdowngraded U.S. debt to AA+,a score that ranks belowLiechtenstein.28Reaction of commentator: “On the positive side, we are nowequal with Belgium, so we should be getting an overdueupgrade to our beer and chocolate.”http://seekingalpha.comAugust 6, 2011
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  31. 31. © Vlerick Business SchoolSOVEREIGN WEALTH FUNDS Abu Dhabi Investment Authority + 500 bio $ China Investment Corporation 300 bio $ Kuwait Investment Authority 250 bio $ Hong Kong Monetary Authority 173 bio $ Qatar Investment Authority (Volkswagen) Singapore Investment Corporation Many of the new economies’ state funds invested heavily inAmerican and European firms during crisis31
  32. 32. © Vlerick Business SchoolASIA, MIDDLE EAST AND THE BRICS Chinese Shandong Heavy Industry buys Ferretti (Riva, – 374mio euro) from Candover (PE fund) Brasil > UK Rosneft > ExxonMobil Record results: Ferrari, Porsche,De Beers, LVMH, Rolls Royce,…32
  33. 33. © Vlerick Business SchoolINTEREST RATES33
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  42. 42. © Vlerick Business SchoolFACEBOOK IPO#experiencevlerick42
  43. 43. © Vlerick Business SchoolFACEBOOK IPO Amount to be raised: $ 5 bio Total Valuation: $75-100 bio Dual-class shares Zuckerberg has 18% ownership but 57% of votingrightsAt market value of $100 bio: 845 mio user  $118/user Revenues: $ 3.71 bio  P/S= 27 Profit: $ 1 bio  P/E= 10043
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  47. 47. © Vlerick Business SchoolB-POST FIRST IPO IN BRUSSELS IN MORETHAN THREE YEARS#experiencevlerick47 Exit of CVC (25%-30% shares) CVC will keep 15% Belgian government: 50% + 1 share Value estimted around €3 bio Syndicate of banks responsible for IPO:JP Morgan, Nomura, BNP Paribas Fortis, MorganStanley, UBS, KBC, ING, Belfius and Royal Bank ofCanada High dividend yield (6-8%) 26000 FTE 10.5 letters a day
  48. 48. © Vlerick Business SchoolTOP IPOS IN BRUSSELS AND THEIRPERFORMANCE#experiencevlerick48Source: De Tijd
  49. 49. © Vlerick Business SchoolHOLLYWOOD DISCOVERS CROWDFUNDING#experiencevlerick49CANNES, France--The Cannes FilmFestival can sometimes make room forsomeone a little different. Someone,say, like Jeremy Saulnier, a little-known director who, at 36, has used alittle pluck and plenty of Kickstarter todefy the stereotypes of the worldsmost prestigious (and expensive)festival.Thanks to the democratizing advantages of crowdfunding, Saulnier is showing an alternativepath to the normally elite precincts of the Cannes Film Festival. Saulnier’s film "Blue Ruin"isnt like most here, which are financed lavishly by foreign distributors, Hollywood studios orgovernment film funds.Saulnier and his wife liquidated their retirement accounts, refinanced their home and ran upwell over a $100,000 in credit-card debt to make the movie. But the real key came when,needing tens of thousands of dollars to trigger cast and crew deals, Saulnier put his projecton Kickstarter. He raised the necessary $35,000 in a matter of weeks.
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  52. 52. © Vlerick Business SchoolRAISING DEBT: SOME RECENT BOND ISSUES ArcelorMittal (BBB-): $3 bio: 3.75% (5 year), 5.50% (10years), 6.75% (30 years) Jaguar Land Rover (B+): $1.6 bio (8.125%)7 years AB Inbev (A-): € 750 mio (4%!!!) 10 years Hyatt hotels (BBB): $250.0 (3.875% -5 years) and $250.0(5.375% - 10 years)52
  53. 53. © Vlerick Business SchoolFINANCING AT LOW COST Oct 2010: Wal-Mart: 750 mio $, 3-year, 0.866% (30 bp overtreasuries) Microsoft: 1 bio $, 3-year, 0.931% (25 bp overtreasuries) Long terms (end of 2010) JP Morgan Chase: 5.5%, 30 years Goldman Sachs: 6.125%, 50 years Rabobank: 5.8%, 100 years53
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  57. 57. © Vlerick Business School!#experiencevlerick57
  58. 58. © Vlerick Business SchoolCASH GIANTS S&P500 STOXX600#experiencevlerick58Source: De Tijd
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  69. 69. © Vlerick Business SchoolWHO MASTERS THE FIELD OF FINANCE?FORBES: World’s Billionaires69Rank Name CitizenshipNet Worth($bil)1 Carlos Slim Helu Mexico 53.52 William Gates III United States 53.03 Warren Buffett United States 47.04 Mukesh Ambani India 29.05 Lakshmi Mittal India 28.76 Lawrence Ellison United States 28.07 Bernard Arnault France 27.58 Eike Batista Brazil 27.09 Amancio Ortega Spain 25.010 Karl Albrecht Germany 23.5
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  72. 72. © Vlerick Business SchoolINVESTMENTS Best NASDAQ performers since December 2000,annual return: Monster Beverage: 60% Apple: 44% Priceline.com: 36% Amazon.com: 17% eBay: 11%72
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  76. 76. © Vlerick Business SchoolFIRMS IN TROUBLE / BANKRUPTCIES / CH11 Philips considers selling TV business Saab Eastman Kodak American Airlines Baseball club LA Dodgers Chapter 11 Borders (second largest brick-and-mortar bookseller) Chapter 11 Closing 200 shops Focus on Borders.com76
  77. 77. © Vlerick Business SchoolJOB CUTS ANNOUNCED IN LAST MONTHS HSBC: 30,000; Lloyds: 15,000; UBS: 3,500 Bank of America: 40,000 Goldman Sachs & JP Morgan: 1,000 Unicredit: 5,200 jobs RIM/Blackberry: 2,000; Yahoo: 2,000 Philips: 4,500; Nokia Siemens Networks: 17,000 Astra-Zeneca: 7,300 / Novartis: 2,000 jobs / Roche:4,500 jobs Pfizer Patents expire, eg Lipitor (peak sales: 12.9 bio/year;cumulative 117 bio $) Procter&Gamble: 5,700 American Airlines: 17,00077
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  80. 80. MISCELLANEOUS
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  82. 82. © Vlerick Business SchoolTOP COMPANIES: HIGHEST PROFITS 201082Rank CompanyProfits 2010 ($millions)1 Nestlé 32,843.02 Gazprom 31,894.53 Exxon Mobil 30,460.04 Industrial & Commercial Bank of China 24,398.25 Royal Dutch Shell 20,127.06 China Construction Bank 19,920.37 AT&T 19,864.08 Petrobras 19,184.09 Chevron 19,024.010 Microsoft 18,760.0
  83. 83. © Vlerick Business SchoolTOP COMPANIES: MONEY LOSERSSource: CNNMoney.com83Rank CompanyLoss 2009 ($millions)1American InternationalGroup99,2892 Fannie Mae 58,7073 Freddie Mac 50,1194 General Motors 30,8605 Citigroup 27,6846 Merrill Lynch 27,6127 ConocoPhillips 16,9988 Ford Motor 14,6729 Time Warner 13,40210 CBS 11,673
  84. 84. © Vlerick Business SchoolCORPORATE GOVERNANCE Corporate governance, VW: Ursula Piëch (55)joins VW Board – Fernand Piëch is 74 Porsche-Piëch family has 5/20 seats New York Times: cumulative profit last 4 years:3 mio euro, CEO Janet Robinson got sacked andgot golden parachute of 23.7 mio dollar Tim Cooks made 378 mio $ in 2011 (Jobs 2006:647 mio $) Bettencourt (89) leaves l’Oréal Board84
  85. 85. © Vlerick Business SchoolACCOUNTING FRAUD Olympus Japanese company, prefer to hide fraud than tolose face/reputation Decades of manipulated figures CEO Michael Woodford was critical, got sacked -29% (maximum Tokyo allows) on announcement Issues regarding consultancy fees, especiallyregarding M&A, payments to Cayman islands,… Due diligence, corporate governance:underdeveloped, lack of transparency (keiretsu –cross-participations), often no independentdirectors85
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  87. 87. © Vlerick Business SchoolJÉRÔME KERVIELSource: Financial Times87Kerviel found guiltyin SocGen scandalJérôme Kerviel, the roguetrader, was sentenced to threeyears in prison and ordered topay €4.9bn ($6.75bn) indamages to Société Général fortaking risks that could have ledto the collapse of his formeremployer, France’s secondbiggest bank.
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  90. 90. © Vlerick Business SchoolFEEL LIKE SOME MORE? Executive Master Class Corporate Finance (Fall2013) Executive Master Class Controllership (spring2014) Financial Management for Non-FinancialManagers (September 2013)#experiencevlerick90
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