What Yahoo Got for Its Big Tumblr Deal

Tumblr had just $16.6 million in cash, $74 million in tangible assets and $182.4 million in "customer contracts and related relationships" when it sold itself to Yahoo, according to a regulatory filing.

Detroit Blocks Other Cities From Bond Market

The Detroit Effect has rippled all the way To Wall Street.

Two weeks after Detroit declared bankruptcy, cities, counties and other local governments in Michigan are getting a cold shoulder in the municipal bond market.

The judgment has been swift and brutal. Borrowing costs are up around the state, in some cases drastically. On Thursday, Saginaw County became the latest casualty when it said it was delaying a $60 million bond sale planned for Friday. It had hoped to put the proceeds into its pension fund.

It was the third postponed bond sale in Michigan since Detroit dropped its bombshell on July 18. Earlier this week, the city of Battle Creek said it would postpone a $16 million deal scheduled for August because of concerns that investors would demand interest rates that were too high. And the previous week, Genesee County pulled a $54 million bond sale off the market for the same reason.

Detroit’s bankruptcy, the largest ever by a municipality, has raised fundamental concerns about the safety and security of municipal bonds, certainly in Michigan but potentially elsewhere in the country, too. The municipal bond market appears to be sending Michigan’s cities a message that no matter how well rated they are, they are going to have to put their plans and projects on hold or pay more for them.

When Jefferson County, Ala., declared bankruptcy in 2011, there were warnings it had tainted the credit of all other municipalities in the state, but the expected fallout never materialized. After Orange County, Calif., came through its bankruptcy in the 1990s, its borrowing costs actually fell. But Michigan appears to have something new â€" a bankruptcy that makes it harder for others in the state to borrow.

Detroit’s state-appointed emergency manager, Kevyn Orr, has proposed imposing deep cuts on some bondholders â€" treating them the same, in effect, as retired Detroit workers who have been receiving city-paid health insurance that will now end. Mr. Orr’s bankruptcy plan would put them all at the back of the line for whatever money is available, as unsecured creditors.

And because the city’s bankruptcy filing was approved by the governor, Rick Snyder, it is seen as the best distillation of how Michigan will treat certain bondholders in times of trouble.

Putting a city’s “full faith, credit and taxing power” behind a bond no longer means what it did in the past, anywhere in the state, critics say. The governor and Mr. Orr have said they are not concerned about the effect of the bankruptcy plan on the municipal bond market as a whole. But other participants find their treatment of indebtedness profoundly disturbing, and their anxiety has spilled over to other Michigan municipalities.

“A lot of the people I talk to are investors who are just very angry about this,” said Matt Fabian, a managing director at Municipal Market Advisors. “Bonds are so cheap everywhere across the whole market, there’s no reason to put anyone in Michigan bonds right now.”

Sara Wurfel, a spokeswoman for Governor Snyder, acknowledged the concerns, but said they were overblown. She called Detroit’s financial breakdown “an incredibly unique situation,” and said the bond rating agencies would continue to rate Michigan’s other municipalities individually, each on its own strengths and weaknesses no matter what went on in Detroit.

“Michigan is home to hundreds of local communities across our state, rated by the credit agencies,” she said. According to a recent analysis by Standard & Poor’s, she said, “only two of those aren’t investment grade. There continue to be an abundance of sound, smart investments to make in Michigan and our local communities. Michigan’s fiscal house is in order and sound.”

Mr. Fabian and others who work with municipal bonds cited two main concerns coming out of Detroit. First was the city’s plan to put several different kinds of bonds, plus the retirees, into one big category â€" unsecured creditors â€" even though bonds were issued with many different ratings and promised investors different interest rates accordingly. If Detroit succeeds in lumping them all together in a single bankruptcy class, then by logic, the bonds of other Michigan cities should have their ratings changed accordingly. The ratings would go down, and the investors holding the bonds would take losses.

Creditors recalled that Michigan’s state treasurer helped to market some of Detroit’s debt, encouraging investors to buy it as very safe.
“Now they’re saying that the investors are getting what they deserve, and they should have known better,” Mr. Fabian said. “So you can’t really trust the statements of the state government.”

The other concern was that the federal bankruptcy court might ultimately approve Detroit’s treatment of bondholders, setting a precedent that distressed cities in other states might be tempted to follow. Their borrowing costs would then also rise, and that would undercut the way most of the country’s roads, bridges and schoolhouses are built â€" planned and financed at the local level.

Local officials in Michigan were putting on brave faces Thursday, saying the chill in the market might prove to be temporary, or to have been caused by broad credit conditions unrelated to Detroit. As the Federal Reserve has signaled a coming end to its easy-money policies, interest rates have been rising, making it more expensive for almost everyone to borrow.

“There’s been a lot of things going on in the market,” said Linda Morrison, the city finance manager in Battle Creek. Her city had been planning since last spring to raise $16 million, to pay for a new roof and better seating for the Kellogg Arena, among other improvements. She said that none of the projects were needed urgently and that Battle Creek could afford to wait for more favorable market conditions.

She said she was aware that Detroit’s bankruptcy plan had dealt a blow to longstanding beliefs about a city’s “full faith, credit and taxing power.” But, she added, maybe the judge would decide things in the bondholders’ favor, and the markets would come back.

“Who’s to say that the court won’t decide it that way?” she said.

Detroit Blocks Other Cities From Bond Market

The Detroit Effect has rippled all the way To Wall Street.

Two weeks after Detroit declared bankruptcy, cities, counties and other local governments in Michigan are getting a cold shoulder in the municipal bond market.

The judgment has been swift and brutal. Borrowing costs are up around the state, in some cases drastically. On Thursday, Saginaw County became the latest casualty when it said it was delaying a $60 million bond sale planned for Friday. It had hoped to put the proceeds into its pension fund.

It was the third postponed bond sale in Michigan since Detroit dropped its bombshell on July 18. Earlier this week, the city of Battle Creek said it would postpone a $16 million deal scheduled for August because of concerns that investors would demand interest rates that were too high. And the previous week, Genesee County pulled a $54 million bond sale off the market for the same reason.

Detroit’s bankruptcy, the largest ever by a municipality, has raised fundamental concerns about the safety and security of municipal bonds, certainly in Michigan but potentially elsewhere in the country, too. The municipal bond market appears to be sending Michigan’s cities a message that no matter how well rated they are, they are going to have to put their plans and projects on hold or pay more for them.

When Jefferson County, Ala., declared bankruptcy in 2011, there were warnings it had tainted the credit of all other municipalities in the state, but the expected fallout never materialized. After Orange County, Calif., came through its bankruptcy in the 1990s, its borrowing costs actually fell. But Michigan appears to have something new â€" a bankruptcy that makes it harder for others in the state to borrow.

Detroit’s state-appointed emergency manager, Kevyn Orr, has proposed imposing deep cuts on some bondholders â€" treating them the same, in effect, as retired Detroit workers who have been receiving city-paid health insurance that will now end. Mr. Orr’s bankruptcy plan would put them all at the back of the line for whatever money is available, as unsecured creditors.

And because the city’s bankruptcy filing was approved by the governor, Rick Snyder, it is seen as the best distillation of how Michigan will treat certain bondholders in times of trouble.

Putting a city’s “full faith, credit and taxing power” behind a bond no longer means what it did in the past, anywhere in the state, critics say. The governor and Mr. Orr have said they are not concerned about the effect of the bankruptcy plan on the municipal bond market as a whole. But other participants find their treatment of indebtedness profoundly disturbing, and their anxiety has spilled over to other Michigan municipalities.

“A lot of the people I talk to are investors who are just very angry about this,” said Matt Fabian, a managing director at Municipal Market Advisors. “Bonds are so cheap everywhere across the whole market, there’s no reason to put anyone in Michigan bonds right now.”

Sara Wurfel, a spokeswoman for Governor Snyder, acknowledged the concerns, but said they were overblown. She called Detroit’s financial breakdown “an incredibly unique situation,” and said the bond rating agencies would continue to rate Michigan’s other municipalities individually, each on its own strengths and weaknesses no matter what went on in Detroit.

“Michigan is home to hundreds of local communities across our state, rated by the credit agencies,” she said. According to a recent analysis by Standard & Poor’s, she said, “only two of those aren’t investment grade. There continue to be an abundance of sound, smart investments to make in Michigan and our local communities. Michigan’s fiscal house is in order and sound.”

Mr. Fabian and others who work with municipal bonds cited two main concerns coming out of Detroit. First was the city’s plan to put several different kinds of bonds, plus the retirees, into one big category â€" unsecured creditors â€" even though bonds were issued with many different ratings and promised investors different interest rates accordingly. If Detroit succeeds in lumping them all together in a single bankruptcy class, then by logic, the bonds of other Michigan cities should have their ratings changed accordingly. The ratings would go down, and the investors holding the bonds would take losses.

Creditors recalled that Michigan’s state treasurer helped to market some of Detroit’s debt, encouraging investors to buy it as very safe.
“Now they’re saying that the investors are getting what they deserve, and they should have known better,” Mr. Fabian said. “So you can’t really trust the statements of the state government.”

The other concern was that the federal bankruptcy court might ultimately approve Detroit’s treatment of bondholders, setting a precedent that distressed cities in other states might be tempted to follow. Their borrowing costs would then also rise, and that would undercut the way most of the country’s roads, bridges and schoolhouses are built â€" planned and financed at the local level.

Local officials in Michigan were putting on brave faces Thursday, saying the chill in the market might prove to be temporary, or to have been caused by broad credit conditions unrelated to Detroit. As the Federal Reserve has signaled a coming end to its easy-money policies, interest rates have been rising, making it more expensive for almost everyone to borrow.

“There’s been a lot of things going on in the market,” said Linda Morrison, the city finance manager in Battle Creek. Her city had been planning since last spring to raise $16 million, to pay for a new roof and better seating for the Kellogg Arena, among other improvements. She said that none of the projects were needed urgently and that Battle Creek could afford to wait for more favorable market conditions.

She said she was aware that Detroit’s bankruptcy plan had dealt a blow to longstanding beliefs about a city’s “full faith, credit and taxing power.” But, she added, maybe the judge would decide things in the bondholders’ favor, and the markets would come back.

“Who’s to say that the court won’t decide it that way?” she said.

Inquiry Into JPMorgan’s Trading Loss Enters Final Stage

An investigation into a multibillion-dollar loss at JPMorgan Chase is heading into its final stage with authorities poised to bring civil charges, the latest legal blow to the nation’s biggest bank.

After more than a year of gathering evidence about the trading blunder in London, the Securities and Exchange Commission is expected to strike a settlement with the bank as soon as this fall, according to people briefed on the case. The bank is also bracing to pay a fine to a financial regulator in Britain, one person said.

In recent weeks, JPMorgan’s lawyers have wrangled with the S.E.C. over the contours of the settlement. While the regulator has indicated that it will not charge executives, the people said, it is aiming to extract some admission of wrongdoing from the bank. If JPMorgan agrees, that decision would represent a reversal for the agency after decades of allowing defendants to “neither admit nor deny wrongdoing.”

The S.E.C. has scrutinized the bank over whether its London traders falsified records to hide losses from executives in New York. The S.E.C., the people said, could cite the bank for lax controls that allowed the traders to distort the value of the bets.

The inquiry heated up after the bank acknowledged last summer that it underestimated the losses. JPMorgan restated its first-quarter 2012 earnings downward by $459 million, conceding errors in the valuations.

A parallel criminal investigation, led by the F.B.I. and federal prosecutors in Manhattan, is also ramping up. The authorities, after uncovering internal e-mails and phone recordings,suspect that the traders knew the losses would amount to more than the $2 billion estimate the bank initially provided to investors on May 10, 2012, say the people briefed on the matter. The losses have since swelled to more than $6 billion.

When federal investigators met this spring with Jamie Dimon, the bank’s chief executive, some of the e-mails enraged him, said people briefed on the meeting. Mr. Dimon’s face reddened, they said, as he professed outrage at the employees’ 2012 e-mails.

Mr. Dimon, who is not suspected of any wrongdoing, told investigators that he was unaware traders were obscuring the losses when he held the May 10, 2012 call.

Still, the trading losses left a rare stain on his reputation. Traders in London had made outsize wagers on credit derivatives â€" one became known as the “London whale” because of the size of the bet â€" pointing to a lack of controls at a bank once hailed for its risk management.

The trading blowup, reigniting broader concerns about risk taking on Wall Street, prompted Congressional hearings that featured Mr. Dimon, claimed the jobs of several senior JPMorgan executives and even cost the C.E.O. millions of dollars in compensation he forfeited in the aftermath of the losses.

Yet it is hardly JPMorgan’s only legal woe. Losing its status as Washington’s favorite bank, JPMorgan has become a magnet for scrutiny over the last couple years, drawing investigations from at least eight federal agencies, a state regulator and two European nations. In addition to the trading loss, the authorities are investigating the bank in connection with its financial crisis-era mortgage business. The bank, for example, disclosed on Wednesday that it faced a criminal and civil investigation from federal prosecutors in California, who questioned whether it sold shoddy mortgage securities to investors in the run-up to the financial crisis.

JPMorgan declined to comment. An S.E.C. spokesman could not be immediately reached for comment.

After Going All In During Mining Boom, BHP Cuts Its Ambitions

BHP Billiton, the world’s largest mining company, was willing to spend big in early 2012. It was building new mines and upgrading old ones, at a cost of $18 billion. It considered a potential expansion of its copper and uranium mine, Olympic Dam, which could have cost as much as $20 billion. It proposed a deepwater extension of Port Hedland, its iron ore port, an estimated $10 billion or more.

But BHP has significantly scaled back its ambitions in the last year, replacing its multibillion-dollar spending spree with an austere program of cost cuts and efficiency drives. It shelved the plans for Port Hedland and Olympic Dam, both in Australia, noting the need to find “a less capital-intensive design.” The mergers and acquisitions department is now referred to as the “D department” internally, to signify its focus on disposals, according to a person close to BHP who spoke on the condition of anonymity.

The U-turn from expansionary spending to aggressive pullback has swept the global mining industry with brutal speed and force. With fixed costs rising, commodities prices slumping and profit shrinking, the chief executives of four of the biggest multinationals â€" BHP, Rio Tinto, Anglo American and Barrick Gold â€" have all been replaced. And pinched companies are scrambling to sell off assets and raise money, with mixed results. On Thursday, Rio Tinto shelved plans to sells some aluminum assets, citing the tough environment.

In short, the commodities boom has ended.

BHP now sits atop a sector that is deeply out of favor with investors. Their central complaint is that the big companies, during a period of high metals prices and strong profit from 2009 to 2011, spent too much money building mines instead of returning money to shareholders. In the current environment, these expensive new mines look ill advised, perhaps dangerously so, given that the new capacity could drive down prices further.

“Investors are more than entitled to be concerned about the productivity of the capital they have invested in our business,” said Andrew Mackenzie, the new chief executive of BHP. “They are more than entitled to ask us to think long and hard about every piece of new investment we make, relative to whether we make cash returns to them.”

“If there is a new wind blowing through my part of the sector,” he said, “it is the emphasis now â€" given that we invested quite a lot during a period of slightly higher prices â€" on maximizing the returns from the investments we have already made.”

Mr. Mackenzie, a Scotsman who speaks five languages, is the new, somber voice of the industry. He speaks in the BHP style of academic understatement, referring to the boom as “a period of slightly higher prices.” For a decade, the company’s top ranks have been filled with doctorate-holding economists, management consultants and former academics who become animated when discussing long-term Chinese consumption trends or pricing structures for iron ore.

Given that atmosphere, BHP executives see the rise and fall of commodity prices as part of the typical economic cycle, stressing that the downward pressure should not prompt panic. A longtime industry executive who has experienced the previous ups and downs, Mr. Mackenzie says his job is not to change the company’s strategy but rather to mold it to today’s market realities.

BHP can afford to take the long view. Despite the industry volatility, the company has maintained stable profits, thanks to an unusually diverse variety of commodities. BHP produces oil and gas in addition to iron ore, copper, coal, nickel, aluminum, uranium, diamonds and manganese. In their zeal for economic data, executives constantly highlight a chart that they call “the spaghetti chart” or “the Jackson Pollock chart,” a mess of squiggly lines showing the volatile earnings for each commodity BHP produces, and a smooth line through the middle representing the company’s relatively stable profit.

The diversification has helped BHP weather the harsh downturn better than peers like Rio Tinto, Anglo American and Vale.

BHP never cut its dividend during the financial crisis. And the company’s $5.5 billion in write-downs over the last two years have proven manageable given its earnings. BHP, which will report its annual results later this month, is expected to make $12.5 billion in profits for the latest fiscal year that ended in June.

By comparison, Rio Tinto took a $14 billion write-down this year on two bad investments in Canadian aluminum and African coal. On Thursday, the miner reported a 18 percent drop in profit for the first half of the year, reflecting the weakness in the prices of metals.

Although BHP is holding up better than many rivals, its stock is still suffering. Shares of BHP, which have recovered modestly in recent weeks are still off 15 percent this year.

“What investors are upset about is how these mining companies burned billions of dollars through write-downs,” said Rob Clifford, a mining analyst at Deutsche Bank. “It’s this idea of the companies having too much money and then squandering it.”

With their stocks down, Mr. Mackenzie and other mining chiefs are trying to be highly attuned to investors. In recent months, Mr. Mackenzie has talked to his universe of shareholders, from global institutions to pensioners. The common theme is increasing their cash returns.

When he started in his new role in May, he set the tone by taking a base salary 20 percent lower than that of his predecessor, Marius Kloppers. “I felt that was in keeping with the expectations of the marketplace right now,” he said. “I have a lot to do to move the company forward in terms of productivity and value for money.”

He spent his first day on the job visiting BHP’s complex of iron ore mines, railways and ports in the badlands of Western Australia. As he toured the vast industrial complex, he quizzed managers about how efficiently the haul trucks were moving ore, he said, because “trucks are a big part of our $36 billion cost base.”

New projects have also been frozen indefinitely. The company has announced $1.9 billion in cost savings since July 2012. Within two or three years, Mr. Mackenzie said, he wants capital expenditures to fall to $15 billion or less, compared with $18 billion today.

“His reign should be marked by nothing radical,” said Mr. Clifford of Deutsche Bank. “It should be marked by bludgeoning, boring, good old cost-cutting.”

But BHP and other big mining companies can’t rein in spending overnight. Capital expenditures in the mining business mushroomed from $20 billion in 2003 to $120 billion in 2012, according to Goldman Sachs. Much of the money is tied up in incomplete projects. So the spending can only roll off gradually, as mining projects approved in the heady days are finished in 2014 or 2015. Then there is always the possibility that some projects will take more money and more time.“BHP is in a pincer for the time being,” said Jeff Largey, a mining analyst at Macquarie. He estimated that BHP’s capital expenditures would drop to $17 billion during its fiscal year starting in July, roughly in line with its cash flows. “So there is not much left over for shareholders.”

“All that said, I think BHP will be the first to emerge,” he added.

J.C. Penney Shares Jump on Report of an Ackman Push for a Permanent Chief

William A. Ackman isn’t happy with the status quo of J.C. Penney once more â€" and that has made other shareholders in the struggling department store chain fairly pleased.

Shares of Penney were up about 6 percent in early afternoon trading on Thursday, after CNBC reported that Mr. Ackman has written a letter to his fellow board members urging them to speed up a search for a permanent chief executive. He suggested that the directors could find a new leader within 30 days to 45 days.

Mr. Ackman added in the letter that Allen Questrom, a retail veteran who turned around Penney once before, had indicated a willingness to return if the board picks an acceptable chief executive.

The correspondence highlights yet the latest headache bedeviling Penney, which brought back yet another blast from the past â€" former chief executive Myron Ullman â€" after firing Ron Johnson as chief executive in April. Mr. Johnson, a former head of Apple Inc.‘s vaunted retail operations whom Mr. Ackman championed, was meant to revive a department store chain that had fallen on hard times. But his retail strategies, including doing away with discount sales, only alienated the company’s customers.

Mr. Ullman, who was displaced by Mr. Johnson in the first place, had been brought back with the understanding that he would stabilize the badly listing company. At that time, Mr. Ackman had expressed hope that Penney could find a permanent leader soon. Four months later, however, the board’s newly appointed search committee and its headhunter firm have barely begun their work, according to the hedge fund manager’s letter.

Mr. Ackman described the potential universe of candidates as quite limited. From the letter, the text of which was posted to CNBC’s Web site:

We need a CEO with extensive, ideally department-store retail experience, strong operational skills, and a strong public company track record. When non-competes, geographical considerations, and other personal and timing issues are considered, the number of potential CEO candidates is quite limited.

Echoes of Steve Jobs in Elon Musk

Elon Musk is beginning to exude hints of Steve Jobs. Like Apple’s late chief executive, the boss of Tesla Motors crafts an impressive product. Now he’s gaining a reputation for beating earnings estimates. There is, however, a big difference in how shareholders have rewarded the two men’s work.

Apple under Mr. Jobs mastered keeping Wall Street analysts’ quarterly earnings expectations subdued, only to blow past them. The iPod and iPhone maker managed this feat for at least 24 quarters in a row until a miss in 2011.

Mr. Musk’s electric carmaker has only two quarters of besting estimates under its belt. That’s a good start, though, even if its adjusted $26 million of second-quarter profit, announced on Wednesday, relied on a number of one-offs.

And the company has a longer habit of surpassing bars set by others. Its Model S sedan has won several big awards and matched Consumer Reports’ highest-ever ranking. In the three months to June, the company built 5,100 of its flagship vehicles - beating even its own target by more than 13 percent.

Apple outdid itself under Mr. Jobs, too. By 2008, it was racking up double-digit growth and a pre-tax margin of 21 percent. By the time of his death in October 2011, the margin had hit 31 percent as iPhone and iPad sales took off. Yet the stock traded at barely 10 times forward earnings, suggesting investors remained skeptical even as the company’s successes mounted up.

In sharp contrast, investors in Tesla seem to be assuming the best. It’s a young company and even surviving, let alone thriving, for this long in a tough business is worthy of respect. But with Tesla’s shares up fourfold since January, Mr. Musk’s company is valued at a whopping 35 times estimated 2016 earnings.

By that time a new SUV, known as Model X, will be on the road. Tesla may have a mass-market vehicle to sell by then, too. But at just $35,000, that product is likely to bring down Tesla’s pre-tax margin, which is expected to hit 12 percent by 2016 - great for an automaker, but nowhere near Apple’s or Google’s.

That means it’s still early days for Tesla. Yet where investors seemed constantly afraid Mr. Jobs would lose his edge at Apple, they’re assuming Mr. Musk’s will only get sharper.

Antony Currie is an associate editor at Reuters Breakingviews. For more independent commentary and analysis, visit breakingviews.com.

Icahn Heads to Court With a Point About Dell

Believe it or not, Carl Icahn has a case.

I refer here, of course, to Mr. Icahn’s suit brought through his fund against the board of Dell.

Icahn is suing the board over its latest decision to accept Michael S. Dell’s higher buyout offer in exchange for modifying the rules governing the vote for the deal. On Monday, a hearing will take place in Delaware on whether to expedite Mr. Icahn’s suit.

But while Mr. Icahn is challenging the entire sale process in Delaware, his claims will be more limited on Monday. The main one will be that the Dell board’s postponement of the annual meeting to elect directors to Oct. 17 is an undue delay under Delaware law. This claim is related to a second allegation that the Dell board has manipulated the shareholder vote on the buyout by postponing it to Sept. 13.

The net result is that there are now two meetings planned for Dell more than a month apart. The first will be a vote on the sale and the second will be a vote on Dell’s directors, which would most likely take place only if shareholders reject the deal.

Mr. Icahn does not like these staggered meetings because it means that any proxy contest to unseat the Dell directors, presumably in favor of ones who would support Mr. Icahn’s own recapitalization proposal to buy back 1.1 billion shares at $14 each, could happen only after the buyout vote. But if the buyout vote is not held simultaneously with the vote on directors, Mr. Icahn asserts, that will deprive shareholders of the opportunity to choose between the buyout deal and Mr. Icahn’s alternative, preventing Mr. Dell from making his “best and final” bid. In other words, Mr. Icahn wants both meetings to be held on the same day to put more pressure on Mr. Dell to raise his offer again. (Mr. Dell, by the way, said his last offer was his “best and final” but then proceeded to agree to pay Dell shareholders a higher amount, so Mr. Icahn has a point here).

On Monday, Mr. Icahn will be seeking to have the court schedule a hearing to consider his claims that both meetings should be held on the same date before Sept. 15.

These are not all the claims that Mr. Icahn is likely to ultimately pursue. But he is seeking a preliminary injunction to hold the meetings on the same date, so the only relief he can achieve right now is to show that it cannot be addressed by the court after the buyout takes place. The scheduling of the shareholder meeting is obviously something that cannot be dealt with later.

These two claims appear to be Mr. Icahn’s best ones right now.

Not only that, Mr. Icahn’s first claim, about the undue postponement of the annual meeting, has a good chance of success. Under Delaware law, an annual meeting must be held within 13 months of the previous one. Dell’s last annual meeting was on July 13, 2012.

The Delaware courts have held this requirement to be “virtually absolute.” In past cases, the Delaware courts have repeatedly ordered a meeting held even when there was a good reason for postponement, like the unavailability of financial information or even allegations that another shareholder was out to harm the corporation. In one case, Steel Partners II v. Blank Solutions, a Delaware court refused to allow a meeting postponement where the shareholder was seeking to replace the directors for a sale of the company at a low price. And while the courts have left an opening to justify the delay in extreme cases where there would be an injustice not to do so, this doesn’t seem to be the case here.

In Dell’s case, the 13-month period expires on Aug. 13, 2013. Given the law, this likely means it is game over for Dell on its meeting postponement unless the judge finds the narrow exception in Delaware law applicable.

If Mr. Icahn wins, the court will order Dell to hold its annual meeting at an earlier date.

But this does not end the matter. Mr. Icahn is also asking the court to hold the meetings on the same day and to reset the record date for both to align them.

It’s a nice legal maneuver. Mr. Icahn is attempting to use a favorable claim about the annual meeting to push everything to fruition on the same day. It’s classic Mr. Icahn â€" do everything in your power to win or at least get another nickel out of the bidder. There is a reason I’ve referred to him before as a genius Wile E. Coyote.

But while Mr. Icahn has a good case to hold the annual meeting earlier, it does not mean that the court will force both meetings to be held on the same day.

One reason is that it would be difficult under the proxy rules to set a record date and distribute a proxy for the annual meeting in time to hold it on the same day as the vote on the buyout.

If the court orders the meetings to be held on the same date, the court would also most likely have to agree with Mr. Icahn’s second claim that the Dell board is manipulating the process by staggering the meetings. But such a staggering is not uncommon in the case of merger votes. The reason is to spare the expense and bother of an unneeded vote on directors if the company is going away. Finally, while Mr. Icahn has claimed that having the annual meeting later than Sept. 15 will adversely affect the financing he has lined up for his proposal, it doesn’t appear that there are any other good reasons that shareholders can’t just make the same decision a week later. Much of Mr. Icahn’s financing is his own anyway, so he can just agree with himself to amend the terms.

In any event, the date for the annual meeting is really the big decision for the court, not whether the meeting should be held earlier. As I said, there’s no clear legal reason that the annual meeting must be the same date as the buyout vote, but Mr. Icahn is using the second claim about manipulating the vote for the merger to prod the court to do so. In the background loom Icahn’s future claims about the change in voting standard and issues with procedure, issues that are probably much weaker claims for reasons I’ve elaborated on before. These will also no doubt emerge at some point.

On Monday, the court will decide whether to expedite these claims. And if so, a hearing on the actual substance of these claims will most likely be held either that week or the week after. That second hearing will be no earlier than Aug. 13 because of some uncertainty about whether you have to wait the full 13-month period to bring suit to force a meeting to be held.

While Mr. Icahn has a case and his lawyers have done well here in pursuing a viable case, I can’t help but feel that this is all part of his “years of litigation” strategy, which has worked so far to nudge the buyers to increase the offered price. A victory will only mean that Mr. Icahn will get to run a proxy contest while fighting the merger and attempting to raise yet again the buyout price. It will be a public relations victory, but it still means Mr. Icahn must win over Dell’s shareholders. But then again, Mr. Icahn may only be fighting to push the buyers into one final, final raise to buy peace.

A New and Improved Nexus 7

OK, we get it, Google â€" you want to be a hardware company.

Well, guess what? You’re actually doing a pretty good job of it!

One year ago, you offered a seven-inch tablet called the Nexus 7. You priced it at a remarkably low $200. You admitted that you didn’t make any money on it, in hopes of selling more books, movies, music and TV shows.

And now here you are with a new version of the Nexus 7 (manufactured by Asus). And you’ve decided to name it … the Nexus 7. That’s the most confusing naming convention since â€" well, since Apple started calling every year’s iMac the iMac.

You priced the new Nexus 7 higher: $230 for the 16GB model. The 16GB iPad Mini has a larger screen, but it’s also $100 more. The value of the Nexus 7 looks even better next in the configurations with 32 gigabytes of storage ($270, versus $430 on the Mini) and, coming soon, LTE cellular Internet ($350, versus $560 on the Mini).

Meanwhile, you’ve improved the tablet in dozens of ways. You’ve added a (mediocre) camera on the back, although, bizarrely, you’ve moved the front camera way off-center. You added stereo speakers: they are fine, but not as strong or clear as the Kindle Fire’s. You threw in (very slow) wireless charging, meaning that you can set the thing down onto a compatible charging base without actually plugging in a cable.

You’ve made the thing slightly slimmer, slightly lighter (0.64 pounds) and slightly narrower â€" only 4.5 inches wide, which means that a large hand can hold the entire thing edge to edge and still have a free thumb to tap the screen.

And that screen â€" wowsers. It’s glorious, bright and sharp. You maintain, Google, that at 323 dots per inch, it’s the sharpest of any 7-inch tablet. I believe you’re right.

It’s too bad you made those design compromises, though. That nice pleather back is gone â€" on the new model, it’s just hard plastic with a slightly rubbery coating. The corners are sharper. And you made the margins on the short ends much bigger than on the long sides, making this long, skinny tablet look even longer and skinnier.

I’m so glad you focused on speed, Google. According to CNET’s benchmark testing, the new Nexus 7 performed very strongly against the Mini and rival tablets from Samsung and Sony. Responses to touches on the screen are smooth and fluid. Battery life is around a day and a half of typical on-and-off use.

The operating system, Android 4.3 (which you still call Jelly Bean), has a few tiny tweaks and a couple of bigger improvements. First, parents can set up a children’s account so that children can access only apps that parents approve. (And it can restrict access to in-app purchases). Weirdly, though, parents can’t make the Settings app off-limits, so the truly rebellious offspring can still wreak some havoc.

Second, you added Bluetooth 4.0, which lets certain accessories â€" usually activity trackers like the Fitbit Flex â€" communicate wirelessly without draining the battery much.

The crushing disappointment is, as always, the selection of Android tablet apps. Your catalog is coming along, but a lot of “tablet apps” for Android are still just Android phone apps with wider canvases; they haven’t actually been designed to exploit the larger tablet screen efficiently, as they have on iPads.

Then again, for customers thinking more “Kindle Fire” than “iPad” â€" that is, they want the basics, like reading and watching videos and checking e-mail and browsing the Web â€" that won’t matter.

Thank you, Google. You’ve produced another deeply satisfying machine. You kept the price reasonable. And you’re doing a great job of keeping your competitors honest â€" and pushing the great tablet envelope just enough to keep things interesting.

A New and Improved Nexus 7

OK, we get it, Google â€" you want to be a hardware company.

Well, guess what? You’re actually doing a pretty good job of it!

One year ago, you offered a seven-inch tablet called the Nexus 7. You priced it at a remarkably low $200. You admitted that you didn’t make any money on it, in hopes of selling more books, movies, music and TV shows.

And now here you are with a new version of the Nexus 7 (manufactured by Asus). And you’ve decided to name it … the Nexus 7. That’s the most confusing naming convention since â€" well, since Apple started calling every year’s iMac the iMac.

You priced the new Nexus 7 higher: $230 for the 16GB model. The 16GB iPad Mini has a larger screen, but it’s also $100 more. The value of the Nexus 7 looks even better next in the configurations with 32 gigabytes of storage ($270, versus $430 on the Mini) and, coming soon, LTE cellular Internet ($350, versus $560 on the Mini).

Meanwhile, you’ve improved the tablet in dozens of ways. You’ve added a (mediocre) camera on the back, although, bizarrely, you’ve moved the front camera way off-center. You added stereo speakers: they are fine, but not as strong or clear as the Kindle Fire’s. You threw in (very slow) wireless charging, meaning that you can set the thing down onto a compatible charging base without actually plugging in a cable.

You’ve made the thing slightly slimmer, slightly lighter (0.64 pounds) and slightly narrower â€" only 4.5 inches wide, which means that a large hand can hold the entire thing edge to edge and still have a free thumb to tap the screen.

And that screen â€" wowsers. It’s glorious, bright and sharp. You maintain, Google, that at 323 dots per inch, it’s the sharpest of any 7-inch tablet. I believe you’re right.

It’s too bad you made those design compromises, though. That nice pleather back is gone â€" on the new model, it’s just hard plastic with a slightly rubbery coating. The corners are sharper. And you made the margins on the short ends much bigger than on the long sides, making this long, skinny tablet look even longer and skinnier.

I’m so glad you focused on speed, Google. According to CNET’s benchmark testing, the new Nexus 7 performed very strongly against the Mini and rival tablets from Samsung and Sony. Responses to touches on the screen are smooth and fluid. Battery life is around a day and a half of typical on-and-off use.

The operating system, Android 4.3 (which you still call Jelly Bean), has a few tiny tweaks and a couple of bigger improvements. First, parents can set up a children’s account so that children can access only apps that parents approve. (And it can restrict access to in-app purchases). Weirdly, though, parents can’t make the Settings app off-limits, so the truly rebellious offspring can still wreak some havoc.

Second, you added Bluetooth 4.0, which lets certain accessories â€" usually activity trackers like the Fitbit Flex â€" communicate wirelessly without draining the battery much.

The crushing disappointment is, as always, the selection of Android tablet apps. Your catalog is coming along, but a lot of “tablet apps” for Android are still just Android phone apps with wider canvases; they haven’t actually been designed to exploit the larger tablet screen efficiently, as they have on iPads.

Then again, for customers thinking more “Kindle Fire” than “iPad” â€" that is, they want the basics, like reading and watching videos and checking e-mail and browsing the Web â€" that won’t matter.

Thank you, Google. You’ve produced another deeply satisfying machine. You kept the price reasonable. And you’re doing a great job of keeping your competitors honest â€" and pushing the great tablet envelope just enough to keep things interesting.

New Embarrassment for British Regulator

LONDON â€" Britain’s Serious Fraud Office faced renewed embarrassment on Thursday after it admitted that it had lost thousands of documents linked to an investigation into the British aerospace giant BAE Systems.

The office has been trying to rejuvenate its reputation under its new leader, David Green, after widespread criticism of a botched investigation into the role of the property tycoon Vincent Tchenguiz in the collapse of Icelandic bank Kaupthing.

On Thursday, the British authority, which is currently investigating several cases related to the rigging of the London interbank offered rate, or Libor, said it had lost around 3 percent of the material connected to a case against BAE Systems â€" or 32,000 documents, 81 audio tapes and other electronic media. The case involved BAE’s payments to a Tanzanian employee. As part of a settlement with the office in 2010, BAE paid 30 million pounds (more than $46 million) to educational projects in Tanzania.

The office said Thursday that it had discovered the loss in May after it accidentally sent unauthorized material to individuals connected to the case.

“Any loss of data is a serious matter and the S.F.O. has taken action to ensure no further material can be wrongly sent out,” a spokesman for the regulator said in a statement.

The office said in the statement that it had carried out an independent investigation into the data loss, which has led it to increase its data protection processes.

The data loss comes just as the regulator is flexing its muscles after years of underinvestment and failure to catch fraud in Britain’s corporate sector.

Last year, the office was ordered to pay most of the legal costs of Mr. Tchenguiz, who also is suing it for about $350 million over the mishandling of the three-year investigation. The regulator denies the charges.

Supported by an increased annual budget, the office has so far charged three people, including a former Citigroup trader and two brokers, with fraud related to the manipulation of Libor. The three will face criminal trials later this year.

Apollo Shows Strong Gains as Investments Rise in Value

Many private equity firms showed big gains in profits during the second quarter, but few can challenge Apollo Global Management for most improved.

The buyout firm said on Thursday that second-quarter earnings jumped nearly tenfold, to $197.8 million, from the period a year earlier. The company said its core private equity portfolio performed well, and it also cashed out of a number of investments.

The pro forma profit, reported as economic net income after taxes, amounted to $1.10 a share. That was more than double the average analyst estimate of 50 cents a share, according to Standard & Poor’s Capital IQ.

Strong stock markets have helped the private equity industry in recent quarters, in particular by pushing up the value of these firms’ investments. Apollo said its assets under management gained $13.5 billion in value during the quarter.

They have also prompted buyout shops to sell off some of their holdings and lock in gains, whether through initial public offerings or outright sales of portfolio companies. During the second quarter alone, Apollo generated $840.5 million worth of realized gains by selling shares or other assets in investments like Realogy, Charter Communications and CKE, the parent company of the Hardee’s fast food chain.

“Our results for the second quarter of 2013 reflect the continued strength of Apollo’s integrated global platform and value-oriented investment approach,” Leon D. Black, Apollo’s chairman and chief executive, said in a statement. “During the quarter we raised nearly $7 billion of new capital across all of our business segments, and we generated more than $7 billion of realizations for our investors.”

Using generally accepted accounting principles, Apollo gained $58.7 million in the quarter, swinging from a net loss of $41.4 million in the period a year earlier.

JPMorgan’s Latest Legal Challenge

JPMorgan Chase disclosed in a regulatory filing on Wednesday that it faced a criminal and civil investigation into whether it sold shoddy mortgage securities to investors before the financial crisis, Jessica Silver-Greenberg and Ben Protess report in DealBook. The investigation is the latest legal threat to the bank and one of several mortgage-related problems for the industry.

JPMorgan said the civil division of the United States attorney’s office for the Eastern District of California had “preliminarily concluded” that JPMorgan flouted federal laws with its sale of subprime mortgage securities from 2005 to 2007. The parallel criminal inquiry is in a preliminary stage, according to a person briefed on the matter.

“Adding to scrutiny of the bank, federal prosecutors in Philadelphia are examining whether JPMorgan duped investors into buying troubled mortgage securities that later imploded, according to people briefed on the matter, who spoke on the condition of anonymity,” DealBook writes. “The prosecutors are investigating whether JPMorgan churned out the mortgage-backed securities without ensuring that the investments met underwriting standards, the people said.”

BLACKSTONE MOVES TO SELL HILTON IN I.P.O.  | Hilton Worldwide, the giant hotel company that the Blackstone Group bought in the summer of 2007 for $26 billion, has begun preparations for an initial public offering, DealBook’s Michael J. de la Merced reports. That includes hiring four banks â€" Deutsche Bank, Goldman Sachs, Bank of America Merrill Lynch and Morgan Stanley â€" to start the process, according to people briefed on the matter. An offering for Hilton would probably come in the first half of next year, one of these people said.

“Private equity firms have been eager to sell their companies, either outright or through an initial offering, to take advantage of booming stock markets and generate realized profits for themselves and their limited partners,” Mr. de la Merced writes. “That has served to bolster the financials of the alternative investment giants. Last month, Blackstone reported a tripling of its second-quarter profit, thanks in part to cashing out of its investments.”

ON THE AGENDA  | 
T-Mobile US and Apollo Global Management report earnings before the market opens. Eric Lefkofsky, the newly named chief executive of Groupon, is on CNBC at 10:15 a.m. Joan Solotar, senior managing director at Blackstone, is on CNBC at 5 p.m.

ICAHN BOLSTERS ASSAULT ON DELL  | Carl C. Icahn is not giving up his fight against the effort by Michael S. Dell to buy the computer maker he founded. The question is whether Mr. Icahn’s latest moves shore up his assault as the odds stack up against him, Mr. de la Merced writes in DealBook. On Monday, Mr. Icahn disclosed that he bought an additional four million shares in Dell late last week, bringing his stake to roughly 9 percent. He has also filed a lawsuit in an effort to prevent a special committee of Dell’s board from altering the rules of the proposed leveraged buyout.

“By buying the additional shares, Mr. Icahn has cemented himself as Dell’s biggest outside investor with an 8.9 percent stake, surpassed only by the company’s eponymous founder and his 15.7 percent stake,” Mr. de la Merced writes. “But the Dell special committee’s move greatly diminished Mr. Icahn’s power to block the deal.”

Mergers & Acquisitions »

The Times Is Not for Sale, Publisher Says  |  “Will our family seek to sell The Times? The answer to that is no,” the newspaper’s publisher said in a statement Wednesday night. NEW YORK TIMES

MegaFon to Buy Russian Cellphone Provider for $1.2 Billion  |  MegaFon, one of Russia’s largest mobile phone companies, agreed on Thursday to buy a local rival, Scartel, for $1.2 billion in a bid to increase its access to fast data networks. The deal will give MegaFon ownership of Scartel’s so-called fourth-generation cellphone network, which provides customers with high speed access to the Internet through their smartphones. DealBook »

American Greetings Buyout Is Approved by Shareholders  |  A $606 million buyout of the company by its founding family received support from 81 percent of the voting power of the outstanding shares. DealBook »

Bidders Said to Circle French TV Distribution Group  |  The domestic unit of Télédiffusion de France has attracted about seven bidders for a deal that could be worth about $5.3 billion, Reuters reports, citing unidentified people familiar with the matter. REUTERS

Yahoo Rethinks Its Logo  |  The company announced it would reveal a new design for its logo next month. NEW YORK TIMES BITS

AOL to Buy Adap.tv, a Video Ad Platform, for $405 Million  |  AOL agreed on Wednesday to buy Adap.tv, a video advertising platform, for about $405 million in cash and stock, in its biggest acquisition since becoming an independent company. DealBook »

INVESTMENT BANKING »

Commerzbank Earnings Exceed Expectations  |  Shares of Commerzbank, the German lender, rose as much as 11 percent after the bank said net income fell 84 percent in the second quarter, a decline that was not as steep as analysts had expected, Bloomberg News reports. BLOOMBERG NEWS

London Metal Exchange Said to Consider C.E.O. Candidates  |  Three people are being considered to succeed Martin Abbott as chief executive of the London Metal Exchange when he steps down at the end of the year, according to Bloomberg News, which cites two unidentified people familiar with the process. BLOOMBERG NEWS

Cargill Expands in Energy Trading  |  The move by Cargill, a giant trader of agricultural commodities, is coming even as banks retreat from physical energy markets, The Financial Times reports. FINANCIAL TIMES

PRIVATE EQUITY »

Investors Grant TPG More Time to Spend Capital  |  Investors in TPG’s flagship fund agreed to give the private equity firm more time to spend a pile of capital that was reported to be $3 billion. REUTERS

Carlyle Profit Rises as Firm Continues to Cash Out  |  The investment giant said on Wednesday that it earned $155.8 million for the quarter ended June 30, up nearly fourfold from the period a year earlier, but the result fell short of expectations. DealBook »

HEDGE FUNDS »

Pressure Mounts on Ackman in Herbalife Bet  |  Herbalife’s stock has risen since Soros Fund Management bought a significant stake in the nutritional supplements company this summer, creating more losses for William A. Ackman’s Pershing Square Capital Management, which is betting the stock will fall. “Pershing Square now faces paper losses amounting to roughly $350 million on its $1 billion bet, according to people familiar with the matter,” The Wall Street Journal reports. WALL STREET JOURNAL

Loeb Humbly Accepts Sony’s Rebuff of His Shake-Up Plan  |  In an interview with Variety - whose parent company is partially owned by Daniel S. Loeb’s firm, Third Point - the hedge fund manager contended that he was actually pleased with the outcome of his effort to prod Sony into partially spinning off its entertainment arm. DealBook »

I.P.O./OFFERINGS »

Groupon Names a New Chief Executive  |  Eric Lefkofsky, the co-founder of Groupon who was named interim chief executive after Andrew Mason, the other co-founder, stepped down in February, was named chief executive on Wednesday. Groupon also announced a $300 million share repurchase program. REUTERS

VENTURE CAPITAL »

Tesla Reports Narrower Quarterly Loss  |  Shares of Tesla, the maker of electric cars, jumped in trading after hours on Wednesday after the company reported a narrower net loss in the second quarter and an unexpected operating profit. ASSOCIATED PRESS

Not Banks, but Still Lending Money and Drawing Investors  |  The success of Lending Club, which links up borrowers with investors who are willing to make loans, has spawned imitators and venture capital backers that are looking for similar results. DealBook »

LEGAL/REGULATORY »

A Day in the Life of Wall Street’s Cop  |  Preet Bharara, the United States attorney for the Southern District of New York, tells Bloomberg Businessweek: “My movements are a state secret, and I’m not allowed to tell you that. Other than to say I eat the same thing every day: raw meat.” BLOOMBERG BUSINESSWEEK

Mine Deal Adds Scrutiny on China’s State Industries  |  “A moribund coal mine here descends deeply, more than 3,800 feet underground. But the deal in which a Chinese state-owned conglomerate bought it may be even darker and more labyrinthine,” The New York Times writes. NEW YORK TIMES

Investor Group Challenges Eminent Domain Plan in Richmond  |  The Wall Street Journal reports: “Banks representing some of the nation’s largest bond investors filed suit against the city of Richmond, Calif., on Wednesday to block plans by city officials to seize and buy mortgages using their powers of eminent domain.” WALL STREET JOURNAL

Bank of England Links Interest Rate to Employment  |  The New York Times reports: “In a significant shift in strategy intended to spur Britain’s economic recovery, the Bank of England said on Wednesday that it would aim to keep interest rates at a record low until the nation’s unemployment rate declines to at least 7 percent.” NEW YORK TIMES

Wal-Mart Settles OSHA Case  |  The New York Times reports: “Wal-Mart Stores has agreed to a corporatewide settlement to improve safety conditions related to trash compactors and cleaning chemicals in more than 2,800 of its stores, the United States Department of Labor announced on Wednesday.” NEW YORK TIMES

MegaFon to Buy Russian Cellphone Provider for $1.2 Billion

MegaFon, one of Russia's largest mobile phone companies, agreed on Thursday to buy local rival Scartel for $1.2 billion in a bid to increase its access to fast data networks. The deal will give MegaFon ownership of Scartel's so-called fourth-generation cellphone network, which provides customers with high speed access to the Internet through their smartphones. Read more »