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Description:   Dainippon Sumitomo Pharma Co Ltd (4506.T) agreed on Thursday to buy U.S. drugmaker Sepracor Inc (SEPR.O) for $2.6 billion, giving the Japanese firm a big, local sales force in the world’s largest drugs market. The deal is the latest in a string of overseas acquisitions by Japanese drugmakers keen to grow outside a mature home market and build product pipelines before key drug patents expire.

Source: Bloomberg. com

Date: 9/03/2009

Keys: Mergers and acquisitions

Link: http://www.reuters.com/article/americasMergersNews/idUST4245420090903

Questions for discussion:

  • What are some of the main reasons –financial and otherwise, this deal makes sense for both sides?
  • Are there any downsides to this deal for anyone?
  • How else can these firms grow? Explain your answer.

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Former US Comptroller David Walker says the cost of health care reform will increase the long-term deficit.

Source: CNNMoney – video report
 
Date: 8/26/2009

Keys: Economy, taxes, business expenses, HR

Link: http://money.cnn.com/video/news/2009/08/26/n_walker_deficit.cnnmoney/

Questions for discussion: 

  • Summarize the comments made about the state of the economy and taxation.
  • How might a national health tax and government run insurance plan that removes individual organizations from direct responsibility for employee insured programs be considered financially good for organizational finances?
  • How would a universal health program affect those corporations directly involved in the health care field such as pharmaceutical, insurance, hospital, and hospital supply firms?

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AIG’s stock closed at $47.84 on Thursday. At the start of the month, shares were trading at a mere $13.14. What’s going on here?

Source: CNNMoney.com

Date: 8/27/2009

Keys: Banking, economy, investing

Link:  http://money.cnn.com/2009/08/27/news/companies/aig_stock/index.htm?postversion=2009082716

Questions for discussion:

  • Summarize the reasons given for the remarkable rise is AIG’s stock market value?
  • What do you think of the government’s decision to help refinance AIG through preferred shares? Explain your thinking.
  • Do you think the share value behavior would be different if the government ownership was through regular common shares? Explain your thinking.

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Making money on the thinking of Nouriel Roubini isn’t what it used to be. The New York University professor, who in 2006 foretold the worst financial unraveling since the Great Depression, has yet to say the economy is worth investing in again. “There is a big risk of a double-dip recession,” wrote Roubini, also known as Dr. Doom, in his column in the Financial Times this week.

Source: Bloomberg.com

Date: 8/26/2009

Keys: Stock market, valuation, trading, environment

Link:  http://www.bloomberg.com/apps/news?pid=newsarchive&sid=aO.IwCuJI8pw

Questions for discussion:

  • Summarize the sentiment expressed in this article about choosing to follow or not follow the advice offered by so-called investment “experts”? 
  • What do believe small or large investors should do with the plethora of advice available?
  • How do you think corporate finance managers should view the current environment, with respect to hedging foreign corporate earnings and commodities prices?
  • What is your own view about the current and future state of stock markets, currencies, and commodities?

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Worries over high unemployment pushed U.S. consumer confidence to a four-month low in August, while spending rose modestly in July, indicating the economy’s recovery from recession would be lethargic.

Source: Bloomberg. com

Date: 8/28/2009

Keys: Economy, inventory planning

Link: http://www.reuters.com/article/ousiv/idUSN2835824120090828

Questions for discussion:

  • As a corporate finance manager planning inventories and projected cash flows for the last quarter of the year, how would you interpret this economic information in terms of future financial impact on your firm?
  • Would you increase or decrease your inventory levels if you were an electronics firm such as Samsung or Sony?
  • Would you be optimistic or pessimistic about sales this coming holiday shopping season if you were working at Best Buy?
  • Which businesses do you think should be more aggressive in stocking their inventories and which should be more conservative? Explain your thinking.

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The new minimum wage may mean higher prices for consumers as companies pay for higher payroll costs.

Source: CNNMoney – video report

Date: 7/24/2009

Keys: Budgeting, cash flow, expenses, working capital

Link: http://money.cnn.com

Questions for discussion:

  • How might management of the food store respond to the rise in the minimum wage? Rank your choices starting with the best one.
  • As the financial manager responsible, what would you do to adjust to this increase cost to your operations?
  • Which financial documents would be affected by this particular cost change?

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A weak economy and frozen financing markets could spell trouble for regional banks with big commercial loan portfolios.

Source: CNNMoney.com

Date: 7/27/2009

Keys: Finance, economy, investing

Link:  http://money.cnn.com

Questions for discussion:

  • Banks reflect the economic conditions that exist through the state of their loans to businesses and consumers.  Summarize the reasons given for concern over the banks mentioned in this article?
  • What does this article suggest about investments in these banks and the businesses they serve?

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Charles Schumer, the third-ranking Democrat in the U.S. Senate, asked the Securities and Exchange Commission to ban so-called flash orders for stocks, saying they give high-speed traders an unfair advantage.

Source: Bloomberg.com

Date: 7/25/2009

Keys: Stock market, valuation, trading, environment

Link:  http://www.bloomberg.com

Questions for discussion:

  • Do you think these new technologies should be regulated by the SEC? Explain your reasons.
  • Do you think these technological changes to the trading environment will affect large investors’ perception of risk or their decisions?
  • How about small investors?

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Ericsson AB, the world’s largest maker of wireless phone networks, will buy the wireless equipment unit of insolvent Nortel Networks Corp. for $1.13 billion after beating bids from Nokia Siemens Networks and MatlinPatterson Global Advisers LLC.

Source: Bloomberg. com

Date: 7/25/2009

Keys: Asset acquisition, bankruptcy, valuation, planning

Link: http://www.bloomberg.com

Questions for discussion:

  • Why would Ericsson buy these assets from Nortel’s bankruptcy auction instead of developing them on their own?
  • At what point in the business cycle should firms anticipate bargain sales of assets? Explain why this is the case.
  • How should financial managers plan for this phase of the business cycle?