Publicom will not see the light of day. The $35 bn merger of ad agencies Publicis and Omnicom has been cancelled. The idea that bigger is better in the advertising business seems to me to have been misguided from the start. Ads have to be creative, original, and compelling. They have to respond not just to the language of the target buyer but also to his or her culture. So a single campaign for a top product still has to be hand-tailored for each market. There is therefore no edge except when signing up lazy advertisers from being big and global in the ad business.
Another investor rebellion occurred in Britain today by Standard & Chartered Bank stockholders. They voted 40% against the bank’s higher pay structure. If enough investors vote down these pay boosts, companies will lose their argument that executives will walk away because they could get more money elsewhere.
The next step would be to challenge the assumption by tax-writing legislatures (USÂ Congress among them) that high tax rates discourage job-creating entrepreneurs from doing their thing. Given that higher pay levels are coming in a period when hiring is more or less flat, the argument looks invalid. Moreover, the best paid Americans are the ones running hedge funds. Highest salaries are not being paid to the brass at US companies making things or selling non-financial services. More on a hedge fund operator for paid subscribers below.
Not only did Spain’s Telefonica (TEF sold) report rotten earnings; it also pulled down European markets today which fed through to Wall St. Wall Street’s mood is ugly today. So is mine. That is why I am sprouting egalitarianism.
More follows from Canada, Britain, China, Brazil, Russia, Korea, Finland, South Africa, Colombia, plus two items from South Korea.
*A tax paying hedge fund not overpaying its staff exists–in Canada. Our recently purchased C.I Financial (CIFAF) reported a brilliant Q1 but the stock isn’t moving in the US, having fallen with the loony. However, in a rare show of enthusiasm in Canada, target prices are being raised and results applauded up in Toronto for what they call CIX. We bought it as a takeover target for Bank of Nova Scotia but it is doing very well as a stand-alone stock. We beat the rush on Bay Street by tipping the stock before it reported.
CIFAF Q1 earnings attributable to shareholders rose 23% y/y to C$121.7 mn or 43 loony cents/sh on revenues at the asset management company rising 17% to C$445.6 mn. CIFAF boosted its divvie by 5% to boot to loony cents 28.5 making the yield 3.3%.
The main reason for the boomlet is that assets under management grew by 20% y/y to C$96.5 bn along with another $28.2 bn of assets under administration (up only 16%.) The total, gross sales of CIF funds hit a new record of C$4.41 bn vs 3.8 bn a year earlier. Earnings before interest, taxes, depreciation and amortization hit C$211.2 bn at the close of Q1, or 75 loony cents/sh vs prior year $181.4 bn or 64 cents/sh, a nice rate of growth.
