Corporate Climate Good for Earnings, Not Jobs: Ronald Perelman
Billionaire financier Ronald Perelman told CNBC on Thursday that earnings are expanding at the companies in which he holds stakes, including cosmetics and beauty giant Revlon, but top-line growth has been difficult.
Perelman, chairman and CEO of privately held MacAndrews & Forbes Holdings, said on "Squawk Box" that it's an interesting time: "Overall, our businesses are doing well. Not in regard to revenue growth, but in regard to controlling expenses."
Top-line growth is "very, very difficult in every sector we're in," he added. "Revlon Cosmetics are going to grow 2 to 3 percent this year. Everything is around that level or flat."
Perelman said the current trend of controlling costs is good for profits, but not for job growth. "Unfortunately what is good news for American industry—that profitability of most companies is strong—is bad news for those looking for work," he said.
"We've rationalized our businesses over the last five years. That's good news for operating companies around America, it's bad news for the unemployment rate because those people that we laid off in 2008-2009, there's no need for us to hire back," he said, "We've gotten more efficient and we've gotten more productive."
Perelman appeared on CNBC in his first-ever, live television interview and announced that he pledged $100 million to Columbia Business School. The gift will be used to develop a new facility that will strengthen innovation programs there.
He also explained his investment philosophy. "We look for long-term investments that we can grow and build over time."
Earlier this year, he bid for some of the assets of the EMI music label but lost out to Warner Music.
Perelman said he'd still be interested in buying a label because he loves music, though he's not sure if it's a good business.
"Music is the one art form that affects me the most," he shared. "I think that people will always want music, I think that the form that they will get it in, or distributed to them from, and the price they pay for it is what's up in question."
Because of that interest, he could see himself considering an investment in streaming music service Spotify if it ever came to him. "Spotify, we might take the time to get into to see 'does this make sense' and could we see value here."
But Perelman said he if was ever approached by Twitter or Facebook "we'd turn them down right away," adding, "we wouldn't know how to evaluate" them.
As for the overall mergers and acquisitions market, he observed, "The cheap money environment we've got today allows for purchase prices to be at levels that haven't been seen for a long time."
He added that he's "buying synergistically" and would be open to a deal of a billion dollars or more if it made sense for one of his current companies.
As an example, Perelman said he recently purchased slot machine maker WMS Industries for a total of $1.8 billion to bolster one of his businesses, Scientific Games—a global provider of solutions to lottery and gaming organizations.
The deal "got us into the hardware business of slot machines," he explained. "But more importantly to us, it got us into more extensively in game development and the software business for online gaming. And we will then have a social media gaming platform through WMS."