Mo’ Money, Mo’ Brexit Problems; DOJ V. Health Insurance Industry: The First Round; No News is Not Good News at Yahoo

It’s all Brexit to me…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

The bad Brexit news just keeps on coming with the IMF now sharing its unpleasant thoughts. The fund has cut the global forecast for the next two years, expecting global economic growth for 2016 to come in at 3.1% and 3.4% for 2017. And those figures are on the bright side since the IMF feels that there is “sizable increase in uncertainty” about how bad the Brexit damage will be. That forecast is riding the wave that the EU and British officials will graciously reach new trade agreements that won’t make trading conditions any more challenging than necessary. If officials can’t hash out the details then Britain just might be staring down the wrong end of a recession. All because of the Brexit vote. Perhaps the pro-Brexiters really didn’t expect investors would ditch Britain in favor of more fiscally welcoming euro areas. And who can blame the ditchers, seeing as how the pound has dropped an ugly 12% against the dollar since the ominous vote. The IMF, however, still anticipates actual growth for the UK, if only by a paltry 1.7%. By the way, this is the IMF’s fifth time cutting its forecast in just 15 months. In fact, had the Brexit vote gone the other way, the IMF was set to upgrade global projections. Way to go Britain! As for the impact in the U.S., the IMF thinks it will go relatively unscathed. How reassuring.

Put up your dukes…

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

Looks like there won’t be any big health insurance company mergers. At least not if the Department of Justice has its way. Which it usually does. Anthem’s proposed $48 billion merger with Cigna and Aetna’s proposed $34 billion merger with Humana are on hold, and maybe permanently, as the Justice Department gets set to file antitrust lawsuits to block their ambitious plans. The Justice Department, which has been scrutinizing these deals for a year, is worried that these mergers would reduce competition and harm the little people a.k.a. the consumers with much higher prices. But the health insurance companies argue that they’ve endured some challenges with President Barack Obama’s Affordable Care Act and would like to prove the Justice Department wrong by shedding assets to competitors which would help them achieve cost savings and better results. Anthem and Aetna argued that their proposed mergers would provide them with the right scale to create more savings. And who doesn’t like savings? But the Justice Department isn’t biting. A merger between Anthem and Cigna would give the  newly combined company 54 million members with $117 billion in yearly revenue. The health insurance industry would shrink to three humongous players from five massive ones. United Health Group would sit smack dab in the middle of them. Expect a fight. A very long and costly one. Investors apparently are as shares went down today at all four health insurance companies.

How much is that website in the window?

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Image courtesy of Stuart Miles/FreeDigitalPhotos.net

What’s to talk about at Yahoo is that there is not much to talk about at Yahoo. Still no word on who will buy the site’s core internet assets, though today is the last day that bids will be accepted. Offers are expected to be between $3.5 billion and $5 billion. Rumors are swirling that Verizon will be the lucky/likely buyer. Not that that has been confirmed. What has been confirmed is that Yahoo managed to eke out earnings of nine cents per share. Too bad expectations were for ten cents.  To add insult to fiscal injury, last year at this time Yahoo took in 16 cents per share. Want to hear about Yahoo’s net loss? Of course you do. The company ate $448 million in net losses. Just to put that into perspective, last year at this time Yahoo only lost $22 million. Yahoo also found itself writing down the value of Tumblr. Again. The first time it did that this year it was for $230 million. Now it was for $382 million. Yahoo bought the internet site just three years ago for the whopping sum $1.1 billion. Oh well. It’s like paying full price for something that went to clearance shortly after. Yahoo also slashed its work-force, going from 11,00 employees to 8,800 employees. And just so you know, Yahoo CEO Marissa Mayer said that the cost-cutting measures are working. It’s just not clear for whom.

 

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