Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
Settings
Settings
Dynamic quotes 
OFFON

4-Traders Homepage  >  Equities  >  Nyse  >  Halliburton Company    HAL

HALLIBURTON COMPANY (HAL)
Mes dernières consult.
Most popular
  Report  
SummaryQuotesChartsNewsAnalysisCalendarCompanyFinancialsConsensusRevisions 
News SummaryMost relevantAll newsofficial PublicationsSector newsTweets

Wal-Mart May Face Considerable Fines, Reputational Issues

share with twitter share with LinkedIn share with facebook
share via e-mail
0
04/23/2012 | 08:11pm CEST
   By Karen Talley 
   Of  
 

Wal-Mart Stores Inc. (WMT) potentially faces major fines and another setback to its reputation as a result of allegations of widespread corruption at its Mexican unit.

The retailer is already feeling some of the ill effects. Its stock, which usually trades in a narrow range, has fallen as much as 5.3% Monday, its biggest one-day drop in two years. Shares were recently off 4.7% to $59.47.

The retailer is under a cloud of suspicion as a result of allegations that its Mexican operation engaged in widespread bribery to expedite expansion in the country. Wal-Mart de Mexico SAB (WALMEX.MX) is now the retailer's largest international unit, operating about 2,100 stores. Along with China and the United Kingdom, Mexico contributed the highest dollar increases to Wal-Mart international's sales growth last year, according to the retailer's annual report.

Now, it is being alleged that Mexican operations grew so large through a bribery campaign to secure permits and other considerations. The assertions were contained in a lengthy investigation by The New York Times. Wal-Mart has said it is investigating the allegations.

The situation involving Wal-Mart, whether it is guilty or innocent, demonstrates the pressures that all retailers are under as they expand overseas, where ways of doing business can differ markedly from the U.S. Corruption can be an easy way to make things happen fast and even government agencies can participate. It ultimately falls to corporate governance at home, by the company's board and top executives, to keep operations on the right track.

Wal-Mart has opened the door to a probe that could turn up violations under the Foreign Corrupt Practices Act, or FCPA, the U.S. law that prohibits paying bribes to foreign government officials, analysts said.

The largest fine under the act was $1.6 billion paid by Siemens AG (SI, SIE.XE). Other companies that have been fined under FCPA include BAE Systems PLC (BAESY, BA.LN), Halliburton Co. (>> Halliburton Company) and Alcatel-Lucent SA (ALU, ALU.FR).

Under the anti-bribery law, the fine can be twice the benefits received by the company, said Usha Haley, a professor of international business and a research associate at the Economic Policy Institute in Washington, D.C. Given the potential benefits to Wal-Mart of the alleged illegal activity, ranging from access to choice real estate to expedited permits and licenses, "I would think fines could at least approach $1 billion," Haley said. A Wal-Mart spokesman declined to comment.

UBS Investment Research said a lot of settlements under the anti-bribery law are in the range of 1% to 2% of sales. Each 1% of Wal-Mart's sales is $4.4 billion, or about 77 cents a share in annual per-share earnings. FCPA investigations have taken anywhere from two to six years to be resolved.

Wal-Mart may find things will go easier with regulators if it removes executives who were involved in the alleged bribery or cover-ups, a step that could lead to a more expedited out-of-court settlement with the U.S. Justice Department, analysts said.

But it may not be Wal-Mart that bears the brunt of the payback. Given the company's position as the world's biggest retailer and its $444 billion in annual sales, "What kind of penalty can you levy that really hurts them," said David Strasser, retail analyst at Janney Capital Markets.

"This is going to probably be more about individuals at Wal-Mart paying the price," Strasser said. "There may be legal issues and career issues for them."

There are also reputational ramifications for Wal-Mart, which in the past has been criticized for allegedly driving small rivals out of business, alleged gender discrimination and unionization issues. Those matters had largely died down recently and the retailer was saying it was on the road back in terms of building sales at its troubled U.S. unit.

While low prices are likely to stay paramount in customers' minds, "It's always bad when you see a company's name in the press for potential criminal activities or civil actions by their executives," said Andrew Stoltmann, principal at Stoltmann Law Offices.

Also, "In [the wake of the FCPA investigation] are sure to follow lawsuits from a variety of government agencies, would-be competitors, and Wal-Mart shareholders," said James Post, a professor with Boston University School of Management. "The company, many of its senior executives, and members of the board of directors all risk civil and criminal litigation."

-By Karen Talley, Dow Jones Newswires; 212-416-2196; [email protected]

Stocks mentioned in the article : Halliburton Company
Stocks mentioned in the article
ChangeLast1st jan.
ALCATEL LUCENT 0.00%-End-of-day quote.0.00%
BAE SYSTEMS -0.17% 600 Delayed Quote.4.89%
HALLIBURTON COMPANY -0.10% 51.96 Delayed Quote.6.32%
SIEMENS 0.28% 108.64 Delayed Quote.-6.76%
WAL-MART DE MEXICO S A B DE C V 2.54% 37.1 End-of-day quote.0.00%
WAL-MART STORES -1.04% 86.98 Delayed Quote.-11.92%
share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news on HALLIBURTON COMPANY
01:30pHALLIBURTON : Hits 1Q Estimates -- Earnings Review
DJ
01:12pHALLIBURTON : revenue jumps on higher North American demand
RE
01:12pHALLIBURTON : revenue jumps on higher North American demand
RE
12:52pHALLIBURTON : 1Q Earnings Snapshot
AQ
12:46pHALLIBURTON : Announces First Quarter 2018 Results
BU
12:01pHALLIBURTON COMPANY : to Host Earnings Call
AC
04/18HALLIBURTON COMPANY : quaterly earnings release
04/05HALLIBURTON : Bahrain says new discovery contains an estimated 80 billion barrel..
RE
03/15CANADIAN NATIONAL RAILWAY : Struggles to Make On-Time Deliveries
DJ
03/14HALLIBURTON : Houston Corporate Campus on 48.9 acres Scheduled for Auction
PR
More news
News from SeekingAlpha
07:38aHalliburton's 34% Q1 revenue rise led by strength in U.S. land sector 
06:45aHalliburton EPS in-line, misses on revenue 
02:22aHALLIBURTON : Watch Out For Latin America Monday 
04/22Notable earnings before Monday?s open 
04/21STOCKS TO WATCH : Earnings Blockbusters And Trump Talks Drug Prices 
Financials ($)
Sales 2018 24 809 M
EBIT 2018 3 430 M
Net income 2018 2 143 M
Debt 2018 7 681 M
Yield 2018 1,41%
P/E ratio 2018 21,00
P/E ratio 2019 15,05
EV / Sales 2018 2,14x
EV / Sales 2019 1,86x
Capitalization 45 473 M
Chart HALLIBURTON COMPANY
Duration : Period :
Halliburton Company Technical Analysis Chart | HAL | US4062161017 | 4-Traders
Technical analysis trends HALLIBURTON COMPANY
Short TermMid-TermLong Term
TrendsBullishNeutralNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus OUTPERFORM
Number of Analysts 33
Average target price 61,8 $
Spread / Average Target 19%
EPS Revisions
Managers
NameTitle
Jeffrey Allen Miller President, Chief Executive Officer & Director
David J. Lesar Executive Chairman
Christopher T. Weber Chief Financial Officer & Executive Vice President
J. Landis Martin Lead Independent Director
Debra L. Reed Independent Director
Sector and Competitors
1st jan.Capitalization (M$)
HALLIBURTON COMPANY6.32%45 473
SCHLUMBERGER NV2.73%95 950
BAKER HUGHES A GE CO7.43%38 286
TECHNIPFMC5.01%15 207
NATIONAL OILWELL VARCO6.19%14 606
CORE LABORATORIES10.91%5 368