What’s Important in the Financial World (4/19/2012) Facebook $104 Billion Value, Gas Price Drop

Gasoline dipped below $3.90, based on the AAA assessment of the average price for a gallon of regular nationwide. The price yesterday was $3.891, down from $3.899 the day before and $3.907 a week ago. The price is not much higher than the year-ago $3.837. Prices of gasoline futures also have leveled out as oil prices have begun to fall and low refinery capacity has not caused the decline in supply that was expected. The effects of high gas prices on the economy have been less than many economists suggested and, as prices slip, the risk of a dent in gross domestic product may have passed.

Roche and Illumina

Illumina (NASDAQ: ILMN) shareholders may be in for a rude surprise. Suitor Roche could be close to walking away from a $6.8 billion offer that values the gene research company’s shares at $51. The Illumina board has pressed for a much, much higher price, backed by the argument that the firm’s technology could be among the most important for medical research over the coming decades. Roche’s tender offer expires on Friday. Illumina’s share price jumped from $32 to $55 in early January after the first Roche offer was made. Investors have become increasingly pessimistic in the past week as shares have fallen to $45.

EU Bank Deleveraging

The International Monetary Fund reports that EU banks may have to sell $3.8 trillion in assets by the end of next year, if the sovereign debt crisis spreads. Many of these banks hold significant amounts of debt in the nations where they are based. The agency’s comments in its Global Financial Stability Report included:

So far, deleveraging has occurred predominantly through buttressing capital positions and reducing non-core activities, leaving the impact on the rest of the world manageable. It is essential to continue to avoid a synchronized, large-scale, and aggressive trimming of balance sheets that could do serious damage to asset prices, credit supply, and economic activity in Europe and beyond.

Facebook Valuation

Several media report that the Facebook buyout of Instagram implies a value of $104 billion for the social network about a month before its initial public offering. Many analysts have set the value that high. The news may help offset concerns that Facebook’s revenue is still very modest. Skepticism also has arisen about the lack of sales that Facebook gets from its mobile application, and potential competition from Google’s (NASDAQ: GOOG) Google+ product. To counter that, Facebook value advocates say the company controls more than a quarter of all U.S. display ad inventory. The amount of time people spend on Facebook also tops any other major site, according to several measurements of online behavior.

Douglas A. McIntyre