What's Important in the Financial World (1/9/2012) Chevy Volt Revivial, M&A Monday

Deal makers were busy over the weekend. Strategic considerations were more the driver of activity than an improved economy, however. Lions Gate Entertainment (NYSE: LGF) will buy Summit Entertainment for $400 million, according to several reports. Lions Gate itself has been speculated as a takeover target. Summit owns the franchise for the remarkably successful Twilight movies. Lions Gate has set an M&A deal that will make it competitive with larger studios. Also over the weekend, Bristol-Myers Squibb (NYSE: BMY) moved further into biopharma. It will pay $2.5 billion for Inhibitex (NYSE: INHX), which has developed treatments for hepatitis C — a rapid-growth market.

Eurozone Crisis Meetings

The financial disaster in the eurozone is still without a systematic solution. The European Central Bank leaders will meet this week. It is nearly certain that the central bank will keep rates low, or perhaps even drop them. But, as the U.S. has demonstrated, low rates are not the key to GDP improvement. The ECB also has said it will not be the financial catalyst of a rescue of weak nations in the region. Germany’s Merkel and France’s Sarkozy are set to meet to discuss how job growth might be renewed in the region. How a fund to help save the eurozone might be structured will also be part of talks. As long as each of these issues is open, the rescue of the eurozone will remain incomplete.

Chevy Volt Production

General Motors (NYSE: GM) said it will match demand for its Chevy Volt electric car with adequate production. That should not be difficult. Battery fire problems have prompted analysts to question whether GM can sell many of the cars. GM has offered to reinforce battery housings in the Volt. This is an admission there is more risk to owning a Volt than anyone might have expected. Production of the Volt could be so tiny that it will become uneconomic for GM to stick with the model at all.

Gadgets on Parade

The International Consumer Electronics Show opens this week in Las Vegas. It is the world’s largest exhibition of gadgets each year. All of the major software, hardware and internet companies will display their latest products. So will hundreds of small firms, each with hopes it can strike gold with consumers, and perhaps with big companies that will buy or license their technologies. The show is so vast that it will be hard for any product, whether from a big company or a small one, to rise above the chaos of an event attended by hundreds of companies and tens of thousands of potential customers.

Douglas A. McIntyre