BUSINESS NEWS FEBRUARY 22ND, 2016
OIL INVESTMENT AT 30 YEAR LOW
The abysmal year that oil has had lead to a squeeze on profits that held investment to its lowest levels in 30 years. After a 24% drop in 2015, capital expenditure is projected to drop 17% in 2016. IEA Executive Director Faith Birol says consumers should not be lulled by low oil prices, as they are indicative of “unpleasant oil securities in the not-too-distant future”. The last year and a half saw oil plummet more than 70%, making a slight gain in the past couple of weeks. The global market for oil is expected to expand as Iran, a major producer, has recently had economic sanctions lifted, opening it up for trade with other countries.
ALLERGAN REPORTS BETTER THAN EXPECTED PROFITS
The pharmaceutical company saw its shares climb 3.2% to $284. Its strong performance was in part due to the strong performance in its U.S. brands segment, which accounted for nearly 60% of their total revenue. That particular segment had an exceptional quarter, climbing 38% to $2.5 billion. Allergan executives have said they continue to expect a takeover from Pfizer Inc. The two agreed to a deal in November, in which Pfizer would buy Allergan for $160 billion. This deal is being examined in detail, as many believe it to be nothing more than tax evasion. Allergan CEO Brenton Saunders said the deal was constructed under the scrutiny of many lawyers and therefore foresaw no trouble in closing it.
GOLDMAN SACHS LEGAL COSTS LOWER THAN EXPECTED
The Wall Street goliath has cut its estimated legal costs by half from its initial predictions of $5.3 billion in November to $2 billion. Goldman Sachs has several judicial proceedings on its radar, due to its number 1 ranking in mergers and acquisitions in 2015. A report from Reuters says that the bank is being targeted by federal-state groups investigating “misconduct in the sale of mortgage-backed securities”. Over the last year, the Justice Department has reached multibillion dollar settlements with big banks such as JP Morgan Chase and Bank of America. Earlier, Goldman Sachs conceded that it had misled investors during the financial crisis and paid a settlement of $5 billion. In early trading on Monday, Goldman Sachs was up nearly 2%.
YAHOO RUMORED TO BE SELLING
Marissa Mayer is Yahoo’s eighth CEO since 2001, and recent speculation suggests that she may be the last. Reports on Monday say that Yahoo is talking to companies who would be interested in buying them out. In early trading, the search engine’s shares were up 1.5%, up 17% from its year low. Potential buyers include Verizon and AT&T. Verizon bought AOL in 2015, and Wall Street is buzzing about the potential of a merger between AOL and Yahoo, which would make strategic sense, experts say. On the other hand, AT&T bought out both Comcast and DirecTV, and has the finances to buy out Yahoo. Despite recent gains, Yahoo has continued to report unsatisfactory quarterly results. Whether executives will officially declare Yahoo for sale remains to be seen.