City Diary: A non-fibre diet can be healthy for company stock

BSkyB (LSE: BSY.Lnews) has been flush with cash. In November last year the broadcaster
announced a £750m share buy-back scheme.

The plan was to reward investors. All that was needed was enough available
stock to, er, buy back.

Just two weeks later, the in-house broker, Bank of America Merrill Lynch
(BAML), surprised City analysts by downgrading BSkyB.

As a result the defensive stock had retreated 9pc to 716p by December16.

The reason for the downgrade was cost and competition. BAML cited BSkyB’s
decision not to invest in fibre.

Instead the broadcaster said it was going to stick to what it does best –
concentrating on core offerings such as movies and sports.

Very compelling.

So compelling Investec (Frankfurt: A0J32Rnews) followed suit downgrading BSkyB, despite the fact that
the broadcaster had always avoided investment in fibre.

The share price dropped 7pc over Christmas.

Not great news for shareholders.

Happy days for the buy-back programme though. There’s been no shortage of
shares to buy back.

BAML wasn’t available to comment.

PR spinner finds himself unravelled

UK bank HSBC (LSE: HSBA.Lnews) didn’t escape industry job cuts.

Senior (Xetra: 852271news) figures disappeared from the press office over recent months.

At least it was handled sensitively.

One long-serving PR given the chop was told be was being “delayered.”

Let’s translate the management consultancy guff: ”Delayering is the process of
pruning the administrative structure of a large organisation by reducing the
number of tiers in its hierarch,” according to an online dictionary.

harsh. Or did the spinner get a taste of his own medicine?

Greece not the ideal destination for all

Ahead of Monday’s Greek bailout package European markets rallied.

Even domestic crisis couldn’t dampen the Dax (Xetra: ^GDAXInews) . It went up following Friday’s
news that German president Christian Wulff had resigned.

Come yesterday’s announcement of a Greek bailout package and the Dax dropped
1.2pc from 6971.03 to 6885.74 and the French CAC followed suit.

As the analysts say, it’s better to travel than arrive. Especially when it
comes to Greece.

Groupon bags the better bargain

Online company Groupon is famed for its special offers, from spa days to

On March 19 managing director Tobias Tschoetsch is speaking at the inaugural
Daily Deal Summit Europe.

It’s nearly £600 for a place at the conference.

For that you get 12 presenters, including Kate Garraway, founder of Goodypass;
Lopo Champalimaud, chief executive of Wahanda; and Parmy Olson, London
Bureau Chief of Forbes.

What a bargain. Well it’s better value than Groupon’s proving to investors.

Groupon disappointed on February 8 with its first quarterly financial results
since it went public. The company reported a net loss of $42.7m (£27.7m).

It’s the truth but not as we know it

And this week’s irony award goes to a spokeswoman for a rather newsworthy
media conglomerate.

She (SNP: ^SHEYnews) preached: “I want the story to represent the truth.”

That’s “represent the truth” mind. Not the actual truth.

DIY chief’s gong for cementing relations

Kingfisher (Euronext: KFR.NXnews) ‘s Ian Cheshire has been awarded the insignia of the Chevalier de
L’Ordre National du Merite.

Let me translate. The French honour, established by Napoleon Bonaparte, was
bestowed upon the chief executive on Monday for his “significant
contribution to the strengthening of economic and commercial links between
France and the UK.”

Kingfisher plc is Europe’s largest home improvement retail group and includes
brands such as BQ, Brico Depot and Screwfix.

The event was hosted by Bernard Ernie, French Ambassador to the UK at his

It seems Cameron and Sarkozy aren’t the only two country representatives
working on Anglo-French relations.

Cheshire said: “I am very honoured to accept this award. I would particularly
like to thank my French colleagues for the way they have contibuted to our

Surely this is a decoration Ian’s missus will allow into the chez Cheshire.

Last September the chief exec announced a new product, a Swarovski-encrusted
BQ toilet seat.

That time round Mrs Cheshire used her right to veto the chav-tastic “bit of

Greece Bailout Wards off Europe Meltdown

PHOTO: Greek Prime Minister Lucas Papademos, right, and Greek Finance Minister Evangelos Venizelos address a media conference after a meeting of eurozone finance ministers at the EU Council building in Brussels Feb. 21, 2012.

The bailout has saved Europe, for now, but it’s unlikely to save Greece.

The euro130 billion ($172 billion) rescue — agreed to Tuesday after an all-night summit of European ministers — prevented an uncontrolled bankrupcty and calmed investors worried that a Greek default would have started a chain reaction across Europe. But it left key problems unresolved.

Draconian budget cuts could keep Greece mired in recession after five straight years. The deal doesn’t directly address the debt problems in other struggling countries in the 17-country zone that uses the euro. Spending cuts could reduce tax revenue and possibly worsen the government’s finances.

“You can’t shrink your way out of a recession,” said Mark Weisbrot, co-director of the liberal Center for Economic and Policy Research in Washington. “What they are doing to Greece really makes no economic sense.”

In Athens, Greeks reacted with a mixture of relief and fear of a dark future.

“I don’t see it with any joy because again we’re being burdened with loans, loans, loans, with no end in sight,” architect Valia Rokou said in the Greek capital.

Finance Minister Evangelos Venizelos said the agreement managed to prevent imminent catastrophe: “we avoided the nightmare scenario,” he said.

PHOTO: Greek Prime Minister Lucas Papademos, right, and Greek Finance Minister Evangelos Venizelos address a media conference after a meeting of eurozone finance ministers at the EU Council building in Brussels Feb. 21, 2012.

PHOTO: Greek Prime Minister Lucas Papademos, right, and Greek Finance Minister Evangelos Venizelos address a media conference after a meeting of eurozone finance ministers at the EU Council building in Brussels Feb. 21, 2012.

The agreement was the second massive bailout of Greece following a euro110 billion ($146 billion) rescue in 2010 that didn’t return the country to solvency. It will give Greece euro130 billion in loans through 2014 from other eurozone governments and the International Monetary Fund. It was secured after Greece agreed to painful and humiliating measures, including thousands of layoffs of civil service workers and cuts to the minimum wage, imposed by countries suspicious of Greece’s reform efforts after two years of what they called the country’s broken promises.

The finance ministers wrangled until the early morning over the details of the rescue, squeezing last-minute concessions out of private holders of Greek debt who agreed to lose 53.5 percent of the face value of their investment to avoid even more severe losses if Greece fails to pay euro14.5 billion in debt due March 20.

The serious risks of the bailout’s failure include the likelihood that Greece’s economy remains in a deep recession instead of returning to growth in 2013 as the deal assumes. That would undermine chances of paying even the reduced debt load, estimated at a still-high 120 percent of annual economic output in 2020, down from 160 percent now.

Additionally, political outrage over the cutbacks could lead Greece politicians to balk at the tough conditions. That could push rescuer countries — led by Germany — to cut off further funding.

Elections in Greece are expected in April. The leaders of the two main parties have committed to the cuts and reform program, but anti-bailout parties have been gaining in the polls.

Greece’s economy shrank 7 percent in the fourth quarter of last year and unemployment is 19 percent, a consequence of cuts in public wages and increased taxes inflicted during a downturn.

If that keeps up, even the rescuers acknowledge the reduction goal of 120 percent of GDP is long gone.

“The risks are clearly on the downside,” said Diego Iscaro, an economist at IHS Global Insight. “By austerity alone, Greece will not solve the problems it has at the moment. We don’t know when the economy will return to growth and how it will grow.”