What's Important in the Financial World (2/2/2012) AstraZeneca Layoffs, Sony Losses

Today is Facebook Day. It will be remembered that way as long as there are IPOs. The Facebook public offering has every aspect of what makes IPOs the focus of so much interest. No large medium in the U.S., or for the most part overseas, lacks a prominent headline about the Facebook news. Almost all of them question whether the company is worth $100 billion, or how much Mark Zuckerberg will be worth, or whether he should have voting control of Facebook. But the hard part is about to start for the social network company, the part that goes on year after year. The next big wave of media coverage will come when the shares of Facebook are listed. The press will cover the rise and fall of the shares for a few weeks or a few months. After that, Facebook will face the endless road of earnings expectations, PR announcements and quarterly calls. It will just be another fairly large American company, which is the fate of every other exciting IPO.

Sony Slashes Forecast

Sony’s (NYSE: SNE) new CEO-elect, Kazuo Hirai, will not get a honeymoon at all. The Japanese company said it expects an annual loss of $2.8 billion. Hirai said he will address Sony’s problems immediately, which he has to say. Any other reaction would be less than responsible, at least in the eyes of shareholders. Hirai sounds quite a bit like Howard Stringer, the lame duck CEO, did when he took the job. Sony, he said, has become too inward looking. Its engineering culture was isolated from the world of electronic product consumption. Stringer said he would tear the curtains away so that Sony employees could see the world of the consumers who bought its products and those of its competitor’s. The process did not work. Now Hirai can repeat it.

Deutsche Bank’s Q4 Loss

Deutsche Bank (NYSE: DB) is the largest bank in Europe, as well as one of the largest in the world. It is also the flagship financial firm of the strongest economy in Europe. Those things have not insulated it from the region’s deepening problems. Deutsche Bank announced that it lost $463 million in the final quarter of 2011. It blamed a collapse in investment banking brought on by the extreme caution of businesses in the region. These results are the swan song for Europe’s most powerful banker, Josef Ackermann. What it took him a decade to create could be gone in a short year. It may be he is lucky to be leaving when he is.

AstraZeneca Cuts 7,000

Drug maker AstraZeneca (NYSE: AZN) will lay off 7,000 people. At least the move is not part of the fallout from Europe’s problems. The reasons are more mundane. Like most major pharma firms, AstraZeneca’s major products are quickly losing their patent protection. The R&D arm of the company cannot replace them with new blockbuster treatments fast enough. Smaller and nimbler biotech firms have become the sector’s innovators. The size of these firms makes it possible for them to prosper on just one or two successes. That has prompted companies like AstraZeneca to buy these smaller companies. But the M&A process must be too slow to refill AstraZeneca’s pipeline, as the layoffs show.

Douglas A. McIntyre