Global business
Gotham City Research, a firm that investigates corporate wrongdoing and places bets that the targeted company's share price will fall (short-selling), claimed its biggest scalp yet when Gowex, a Spanish Wi-Fi provider, sought bankruptcy protection. Gowex's share price had risen by over 1,000 percent since the start of 2013, but Gotham recently issued a report asserting that its finances were a "charade" based on falsified accounting.
A jury found Rengan Rajaratnam not guilty of being involved with the insider-trading scheme operated by his brother, Raj, who was convicted and sentenced to 11 years in prison in 2011. The acquittal is the first defeat for federal prosecutors in a crackdown on illegal stock-trading tips.
Archer Daniels Midland, a giant in crop processing and trading, agreed to buy Wild Flavors, which is based in Switzerland and produces food flavorings. At $3 billion, it is ADM's biggest acquisition to date and boosts its expansion into the ingredients business, a more stable market than trading in grains.
Carlos Slim decided to sell off bits of his mighty América Móvil telecom empire in Mexico, after the government introduced sweeping reforms that would require the industry's dominant player to share the lines from telephone exchanges to homes with rivals (which happens in most rich countries). America Móvil accounts for 80 percent of Mexico's fixed-line business and 70 percent of mobile. It promises to reduce this to below 50 percent but has not specified which assets will go.
Samsung warned that its operating profit in the second quarter would be around 25 percent lower than in the same period last year, well below market expectations. The South Korean company partly blamed the slowing growth of smartphone sales. It is finding it hard to slice into Apple's share of the high-end market and facing cutthroat competition from cheaper Android devices.
After two years of heavy declines, shipments of personal computers rose in the second quarter according to Gartner, a research firm, albeit by just 0.1 percent. IDC, another research firm, reckons PC shipments are still falling, but at a much slower rate — 1.7 percent — than in the past. Both firms said sales posted their best results since the second quarter of 2012, when demand for tablets and mobile devices began to surge.
Amazon began a new chapter in its dispute with Hachette by offering to let the publisher's authors keep all the revenue from their e-books. Hachette is fighting Amazon over the terms for selling its e-books; the online retailer has responded by delaying shipments of Hachette's books and removing pre-order buttons for some items, including J.K. Rowling's latest novel.
America's National Association of Realtors reported that sales of homes to foreigners jumped by 35 percent in the first quarter of 2014, and were worth $92 billion. Sales to Chinese clients accounted for a quarter of that sum, though Canadians still bought the biggest share by volume (19 percent). Most non-Americans chose to buy in the sunshine belt; Florida (23 percent), California (14 percent) and Texas (12 percent) were the most popular states.
Political economy
The government in the Spanish region of Catalonia slapped a $41,000 fine on Airbnb, which markets private short-term room rentals in cities around the world and is a pioneer of the "sharing economy." Airbnb has faced resistance in many places from hoteliers who consider it a threat to their industry, but this is the first penalty imposed on Airbnb in Europe for not adhering to strict regulations about renting property.
The British government said it would conduct a review of how it handles privatizations, after it was criticized by the state's accountants for undervaluing Royal Mail's initial public offering last year. The share price soared after the sale and more than half of the 16 "priority investors" who were allocated shares in the hope they would hold them for the long-term cashed out within weeks.
The new government led by Narendra Modi in India unveiled its first annual budget blueprint. Arun Jaitley, the finance minister, was less radical than some had hoped, but he nevertheless maintained a commitment to reduce the deficit and was more friendly in tone toward foreign investors than his predecessors.
