What's Important in the Financial World (1/30/2012) Bank of America Management, Facebook IPO

There is still no settlement between Greece and the private investors who hold its debt. Greece also faces a call from Germany to have an independent agency supervise its budget. The Greek government voiced a loud reaction to Germany’s suggestion because it would strip the southern European nation of some of its sovereignty. But, as Greece’s GDP shrinks and it desperately needs money to make a bond payment in March, it may have to compromise with Germany and give up some measure of control over its own financial future.

A Royal Loss

Royal Philips Electronics, one of the largest companies in Europe, lost $1.7 billion last year. Some of the loss was due to expenses linked to factory retooling. But the economy also was partially to blame. Philips is a reasonable proxy for parts of global demand because its divisions make a wide array of products from light bulbs to expensive medical equipment. The firm’s CEO, Frans van Houten, said he is worried about the first half of the year. In that, he has joined the chiefs of other large multinationals.

Facebook IPO

Facebook may publicly release the data it needs to begin the process of its IPO. Experts believe the company may be valued as high as $100 billion, as it tries to raise $10 billion. Skeptics believe that the company’s future is not better than other Web 2.0 firms that went public last year. That includes Groupon (NASDAQ: GRPN) and LinkedIn (NASDAQ: LNKD). The difference is that Facebook is not a new phenomenon. It has continued to build a member base that will soon pass one billion. And it continues to take display advertising market share from other large display based companies like Yahoo! (NASDAQ: YHOO).

Bank of America

Bank of America (NYSE: BAC) continues to rearrange its top management in the hope that some new mix will be the silver bullet that helps the financial firm out of its deep problems. Unfortunately, ongoing changes among executives will not make its mortgage problems and balance sheet issues disappear. Bank of America named Christian Meissner as the top manager of its investment bank. This action can be added to appointment of new chief operating officers and the planned layoffs of 30,000 employees.

Douglas A. McIntyre