Showing posts with label CEO. Show all posts
Showing posts with label CEO. Show all posts

Wednesday, December 5, 2012

JOB CUTS: LOGICAL OR SHEER WHIM-BASED?

Jobs cuts, during recession become a ‘necessary’ evil; and this is the only quick solution for companies...

So do announcements of an aggregate 2 million further drop in global employment count (on a single Monday; January 27, 2009) stand justified as the only short term solution? “Yes, this is perhaps the ‘safest’ and ‘most prompt’ decision at the hands of the decision makers,” thumps Van Jackson, Senior Strategy Consultant and Analyst (Foreign Policy). What makes the case of job cuts stronger is that it is not a very common sight to witness such a move across boards, across industries. It’s not just financial, real estate and auto sectors (the biggest bailout grantees) that stand guilty of handing over pink slips, but companies even in the retail, IT and pharma verticals are making it to the headlines for similar reasons. This recent occurence has therefore proven how it is the ‘demand side’ of the market that is to be blamed for disturbing the equilibrium, which therefore called for a reduction in supply for even maintainence of reservation prices by the companies. And as we consider production economics, a reduction in the ‘L’ (read ‘labour’) factor remains the quickest overnight solution to enforce a production scale cut; hence tormenting job cuts and in thousands! Even David Haigh, CEO, Brand Finance, agreeingly states that, “Companies get hit when salaries become more than the revenue. The current economic turmoil has catalysed the heavy retrenchments taking place in many leading global organisations as they seek short-term measures to cut costs and reduce debt...”

Now for the brighter side of the picture: one party that would be most fearful of the downturn (after the ‘employees’ group) is the army of companies’ shareholders. As per a February 2009 World Bank and S&P report, a gutwrenching $15.53 trillion have been wiiped-off at the bourses during the past 12 months, thus representing a total global stock value erosion of 44.09%! Worse, bourses in emerging markets have been reduced to less than half in value during the given time interval (-51.82%)! Understanding how Jack made job cuts count positively for GE’s stock price and market value, investors and shareholders across the globe can hope that their companies will make the most of the announced and future (more?!) jobcuts, thus giving their stocks a better shot at appreciation. And isn’t the primary objective of a pulicly traded entity protection of its shareholder interests? Isn’t it Jack?


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

For More IIPM Info, Visit below mentioned IIPM articles.


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Monday, December 3, 2012

M & A The Perfect Corporate Crime

CEOs have ripped apart shareholders’ wealth globally under the guise of M&As; Indian firms more so! B&E’s Manish K. Pandey, Deepak R. Patra and Karan Mehrishi undertake the most radical analysis of the recent past and destroy age-old perceptions!

The pity is, Indians never learn! You’ll get the drift by the time you end the introduction. First, the dirt! The year 2000 was the eve of the glorious new century, and a boon for the Big-6 M&A consulting firms. And why not! For these global consulting proponents, an example like the year 2000 Vodafone-Mannesmann merger was god’s gift multiplied many times over. It was proclaimed to be the single largest deal in history. Sir Christopher Gent, then CEO, Vodafone paid a smashing $190 billion for Germany’s Mannesmann AG, making Vodafone the biggest operator in Europe. The combined entity was valued at $365 billion, making it the world’s fourth largest company overnight. What better a gift could the M&A brayers ask for? Wasn’t this M&A deal enough proof that M&As were/are the only dynamic and rapid solution forward to mammoth growth and that all those who had criticised M&As for the past so many years were nothing but dimwits?

If Gent’s strategy cup ran full of suicidal moves, Arun Sarin – who was on the Vodafone board since June 1999 (and was equally, if not more, to blame) and who took over from Gent in April 2000 – redefined the standard of how much shareholder value could ever be destroyed from a company. Eight years since the deal, the value of Vodafone in terms of market capitalisation stands at $161.4 billion (as on July 24, 2008), down by a sickening $203.6 billion, a fall of 53%! Arun Sarin ensured that in the last eight years since the merger, Vodafone has become the biggest loss making company ever in the history of mankind! The loss: $86 billion! Both Arun Sarin (who exited in June 2008) and Christopher Gent, apart from the other top management, retired multi-millionaires, a far cry from thousands of Vodafone pauper shareholders.

If that sounded absurd, Gary Foresee took on the infamy mantle with ease. Gary joined Sprint as CEO in the year 2003. Signing bonus amount: $6 odd million! Subsequent years’ pay: Between $1.5-6 million! Gary’s claim to (in)fame was ensuring Sprint’s spectacular merger with Nextel in 2004-05. He sold the deal on the fact that the combined telecom giant would have a subscriber base of 53.8 million in the US! What he sweetly left out was the disaster the deal could be. At the time of the deal, the Sprint Nextel common stock was trading at $26.9; it’s at a sickening $8.30 today! While many shareholders got wiped out Mr. Gary Foresee was kicked out at the end of 2007. His severance package? $40 million!


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

For More IIPM Info, Visit below mentioned IIPM articles.

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Tuesday, October 23, 2012

Dalal Street mavens on the Budget.

You will find no number crunching, no jargon and no guru speak from so called Dalal Street mavens on the Budget. sutanu guru & pramod kumar bring you the real budget story – a story of the lead up to the 2014 Lok Sabha Elections.

Top Congress leaders did discuss issues like disinvestment, relaxation of foreign investment norms and other so called ‘reform’ oriented policies that so excite the corporate sector, Dalal Street and most of mainstream media in the country. But then it boiled down to answering that one key question: should Pranab Mukherjee present a budget for India or Bharat? Now, you and I know the verdict was unquestionably in favour of Bharat. In that sense, this budget makes a decisive break from past budgets in the sense that it is unabashedly about Bharat and does not even bother to offer token gestures to India. Says Congress general Secretary Digvijay Singh, “This budget was always going to be focused on the poor, the farmers and the bottom heap of the population.” Referring to the displeasure and disappointment shown by corporate India and Dalal Street, Singh adds, “Sure, some sections are justified in being unhappy because they have not got the benefits they were hoping for; but then the reality is that you cannot satisfy everybody.”

Absolutely. For decades, successive governments have paid lip service to the poor during budget time while doling out sops to the rich. This budget has finally broken through that vicious cycle of dishonesty, double speak and double standards. This dramatic transformation in the Congress has been going on for quite a while; only it was either largely missed or ignored or jeered by the media when Rahul Gandhi was trying to get across his message of connecting with the real India. Now, even brand gurus accept that the Congress strategy has worked wonders. Says, Santosh Desai, CEO of Future Brands, “The Congress has brought local leadership in their planning strategy over the last few years, which was not their forte in the past. Thus their focus is aam aadmi, but they deliver what they say. Thus, in branding, if you say and deliver, then the effect is clearly visible.” So Dalal Street might be crying. But Pranab Mukherjee has delivered what the Congress has been intending for a while – to completely convince the aam aadmi, the voter, that the government and the party are actually working for them. And don’t be mistaken in the belief that the Congress will use only the Union Budget to implement its strategy for 2014. Recall the exact words used by Pranab Mukherjee very early on his speech on July 6, “While we are determined to convert our words into deeds, members would appreciate that a single budget speech cannot solve all our problems, nor is the Union Budget the only instrument to do so.” So Finance Minister Pranab Mukherjee is not the only ace that the Congress will deal while leading up to 2014. There are many other powerful and transformational jokers in the pack.


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
 
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