Monday, April 02, 2007
LSI Swallowed Agere Today
Agere (a spin-off from Lucent) was acquired by LSI, effective today. The purchase price was 2.16 shares of LCI ($22.55) for each Agere share.
Tuesday, March 27, 2007
The Mebert Hoax
I've always been fascinated by this ultimate example of Dilbert-ism in the real world, but the story due to age (it happened back in 1997) has been getting more difficult to find on the internet. So I've taken a minute to document the story here for posterity.
Here's the story as originall written in the San Jose Mercury News...
My goal is to see if a group of executives will allow somebody who has very few credentials, except for good hair, to come into their meeting and get them to write a mission statement which is so impossibly complicated that it has no real content.--Scott Adams, Oct. 8, 1997, 9:30 a.m.
Two hours later, management consultant Ray Mébert strides through the doors of Logitech International's headquarters in Fremont. Few employees give a second glance at the short, mustached man in a gray suit as he weaves through a maze of cubicles to a conference room in which almost a dozen senior executives have been assembled.
In a memo distributed to a selected group of Logitech's vice presidents and senior managers, Pierluigi Zappacosta, the company's co-founder and vice chairman, described Mébert as a man with ''special talents as a facilitator'' and ''a very original thinker'' who has collaborated with big-name consultants.
It's not as if Logitech, the world's largest manufacturer of computer mice and related devices, is in a slump. In Silicon Valley, the 3,000-employee company is considered a strong innovator. But in this fast-paced industry, survival depends in large part on aggressively finding new business opportunities, which is why the gifted Mébert has been summoned. His charge, in the words of Zappacosta's memo, is to help ''crisply define the goals'' of the New Ventures Group. Translation: It's time for that most dreaded of corporate exercises, rewriting the mission statement.
Mébert (the French pronunciation, please!) carries nothing but a thin manila folder with documents summarizing Logitech's business goals--which he has studiously avoided reading. ''I try not to become too familiar with the companies I'm consulting for,'' Mébert explains. ''I find that, otherwise, generic solutions might not fit as well.''
If the size of his entourage is a yardstick, Mébert clearly is a success. Does Michael Porter, the celebrated authority on competitive business strategy, arrive with a photographer, a videotaping crew and a personal assistant named Sheena Diamond? Noting all the electronic gear, one exec is heard to mutter, ''Wow, he's got to be expensive.''
Mébert quickly confirms his stature in the management consulting universe. ''I did the Harvard MBA thing, and then I went to Procter & Gamble where I worked on the Taste Bright Project,'' Mébert says. Taste Bright, he explains, was a top-secret effort his team worked on for years, to boost soap sales by cashing in on not only the olfactory but also the gustatory sense.
"There actually are some people who admitted in focus groups that they would sometimes taste soap. We found that to get repeat business it was necessary to actually improve the smell as well as the taste of the soap,'' Mébert says. Zappacosta nods empathetically at such a difficult assignment. There follow serious nods--and a few chuckles--around the table.
Mébert continues with his credentials: He did a stint at Fortune Computer (one of the valley's legendary business failures), then founded Ray Mébert Associates. Apple immediately recruited him to strategize on its much ballyhooed--now beleaguered--handheld computer, the Newton.
These less-than-proud consulting experiences do not raise an eyebrow. Then again, as any loyal reader of ''Dilbert'' can tell you, consultants play by their own rules. To quote that management guru Dogbert, ''Consultants don't need much experience in an industry in order to be experts. They learn quickly. If your 26-year-old consultant drives past the Egghead software outlet on the way to an assignment, that would qualify as experience in the software industry.'' Mébert, it seems, adheres strictly to the Dogbert doctrine.
If the Logitech execs were to look closely, they would notice a few signs that Mébert is not exactly who he says. Strands of sandy blond hair peek from under his thick brown locks. His mustache is a little too symmetrical. Not bad, though, given the hasty transformation Mébert underwent two hours earlier at his home in Danville. It's also home to Mébert's alter ego, ''Dilbert'' creator Scott Adams.
And here's a couple of interviews Scott Adams gave about the incident shortly afterwards.
I got a call from Tia O'Brien [an independent reporter on assignment] for the San Jose Mercury News. She wanted to do a story that was going to be interesting and different. We brainstormed and came up with the idea that I'd put on a disguise, go to a corporation as a consultant, and see if I could fool people into thinking that I was a high-paid consultant when, in fact, I was just full of crap. Zappacosta thought it would be a fun idea. So we set up the scam. Tia acted as my assistant, and Pierluigi was the only one who was in on it in a room full of business executives at Logitech. For over one hour I took them through an exercise on how to rebuild their mission statement. I actually convinced them that the one they had was woefully inadequate. That's part of the humor of it - all mission statements are quite useless. So to tell them the one they had wasn't doing the job should have raised a red flag to begin with. But people in corporations are so used to two things: First, absurdity - so nothing seems too unusual. And second, there is not enough payoff to rock the boat. It was much easier for everyone to listen to what I had to say than to jump on me at the first sight of absurdity. Certainly everyone in the room had at least a moment where they said, "Man, I'm wasting my time!" But I made sure I always skated just below the level at which somebody would call my bluff and would think it was worth taking the chance of calling me a fraud. I had them thinking, "What if it just turns out that he's just eccentric but the best consultant in the world?"
See that picture to the left there, by the light switch? Where I'm peering from behind Dilbert? I have a big mustache and fake brown hair on? I was outfitted by a makeup artist and I went into Logitech as a famous consultant. I was brought in by the founder of the company, who was in on it, and he was in on the joke, and a reporter for the San Jose Mercury News, a freelancer who was working there, set it up with me. They had their senior management there and I gave a whole presentation and reworked their mission statement with them. They thought I was there to give them a better mission statement. But, my stated goal was to give them the worst mission statement ever written, convince them it was good, and get them to agree to put it to music. I succeeded in all that. They agreed to put it to music and I didn't actually have them put it to music. But I got volunteers, and people volunteered. It was the worst mission statement ever written. Every person in that meeting was way above average in intelligence and not one bit more gullible than anybody else on Earth. Completely normal gullibility.
Here's the story as originall written in the San Jose Mercury News...
My goal is to see if a group of executives will allow somebody who has very few credentials, except for good hair, to come into their meeting and get them to write a mission statement which is so impossibly complicated that it has no real content.--Scott Adams, Oct. 8, 1997, 9:30 a.m.
Two hours later, management consultant Ray Mébert strides through the doors of Logitech International's headquarters in Fremont. Few employees give a second glance at the short, mustached man in a gray suit as he weaves through a maze of cubicles to a conference room in which almost a dozen senior executives have been assembled.
In a memo distributed to a selected group of Logitech's vice presidents and senior managers, Pierluigi Zappacosta, the company's co-founder and vice chairman, described Mébert as a man with ''special talents as a facilitator'' and ''a very original thinker'' who has collaborated with big-name consultants.
It's not as if Logitech, the world's largest manufacturer of computer mice and related devices, is in a slump. In Silicon Valley, the 3,000-employee company is considered a strong innovator. But in this fast-paced industry, survival depends in large part on aggressively finding new business opportunities, which is why the gifted Mébert has been summoned. His charge, in the words of Zappacosta's memo, is to help ''crisply define the goals'' of the New Ventures Group. Translation: It's time for that most dreaded of corporate exercises, rewriting the mission statement.
Mébert (the French pronunciation, please!) carries nothing but a thin manila folder with documents summarizing Logitech's business goals--which he has studiously avoided reading. ''I try not to become too familiar with the companies I'm consulting for,'' Mébert explains. ''I find that, otherwise, generic solutions might not fit as well.''
If the size of his entourage is a yardstick, Mébert clearly is a success. Does Michael Porter, the celebrated authority on competitive business strategy, arrive with a photographer, a videotaping crew and a personal assistant named Sheena Diamond? Noting all the electronic gear, one exec is heard to mutter, ''Wow, he's got to be expensive.''
Mébert quickly confirms his stature in the management consulting universe. ''I did the Harvard MBA thing, and then I went to Procter & Gamble where I worked on the Taste Bright Project,'' Mébert says. Taste Bright, he explains, was a top-secret effort his team worked on for years, to boost soap sales by cashing in on not only the olfactory but also the gustatory sense.
"There actually are some people who admitted in focus groups that they would sometimes taste soap. We found that to get repeat business it was necessary to actually improve the smell as well as the taste of the soap,'' Mébert says. Zappacosta nods empathetically at such a difficult assignment. There follow serious nods--and a few chuckles--around the table.
Mébert continues with his credentials: He did a stint at Fortune Computer (one of the valley's legendary business failures), then founded Ray Mébert Associates. Apple immediately recruited him to strategize on its much ballyhooed--now beleaguered--handheld computer, the Newton.
These less-than-proud consulting experiences do not raise an eyebrow. Then again, as any loyal reader of ''Dilbert'' can tell you, consultants play by their own rules. To quote that management guru Dogbert, ''Consultants don't need much experience in an industry in order to be experts. They learn quickly. If your 26-year-old consultant drives past the Egghead software outlet on the way to an assignment, that would qualify as experience in the software industry.'' Mébert, it seems, adheres strictly to the Dogbert doctrine.
If the Logitech execs were to look closely, they would notice a few signs that Mébert is not exactly who he says. Strands of sandy blond hair peek from under his thick brown locks. His mustache is a little too symmetrical. Not bad, though, given the hasty transformation Mébert underwent two hours earlier at his home in Danville. It's also home to Mébert's alter ego, ''Dilbert'' creator Scott Adams.
And here's a couple of interviews Scott Adams gave about the incident shortly afterwards.
I got a call from Tia O'Brien [an independent reporter on assignment] for the San Jose Mercury News. She wanted to do a story that was going to be interesting and different. We brainstormed and came up with the idea that I'd put on a disguise, go to a corporation as a consultant, and see if I could fool people into thinking that I was a high-paid consultant when, in fact, I was just full of crap. Zappacosta thought it would be a fun idea. So we set up the scam. Tia acted as my assistant, and Pierluigi was the only one who was in on it in a room full of business executives at Logitech. For over one hour I took them through an exercise on how to rebuild their mission statement. I actually convinced them that the one they had was woefully inadequate. That's part of the humor of it - all mission statements are quite useless. So to tell them the one they had wasn't doing the job should have raised a red flag to begin with. But people in corporations are so used to two things: First, absurdity - so nothing seems too unusual. And second, there is not enough payoff to rock the boat. It was much easier for everyone to listen to what I had to say than to jump on me at the first sight of absurdity. Certainly everyone in the room had at least a moment where they said, "Man, I'm wasting my time!" But I made sure I always skated just below the level at which somebody would call my bluff and would think it was worth taking the chance of calling me a fraud. I had them thinking, "What if it just turns out that he's just eccentric but the best consultant in the world?"
See that picture to the left there, by the light switch? Where I'm peering from behind Dilbert? I have a big mustache and fake brown hair on? I was outfitted by a makeup artist and I went into Logitech as a famous consultant. I was brought in by the founder of the company, who was in on it, and he was in on the joke, and a reporter for the San Jose Mercury News, a freelancer who was working there, set it up with me. They had their senior management there and I gave a whole presentation and reworked their mission statement with them. They thought I was there to give them a better mission statement. But, my stated goal was to give them the worst mission statement ever written, convince them it was good, and get them to agree to put it to music. I succeeded in all that. They agreed to put it to music and I didn't actually have them put it to music. But I got volunteers, and people volunteered. It was the worst mission statement ever written. Every person in that meeting was way above average in intelligence and not one bit more gullible than anybody else on Earth. Completely normal gullibility.
Friday, March 23, 2007
Private Equity Firm To Go Public
Blackstone Group is preparing to become the first major private equity firm to go public. The $4 billion IPO values Blackstone at $40 billion. But investors can only buy into Blackstone's management company, not the companies it owns, and they'll have limited voting rights. Blackstone's partners will remain in control, said Martin Mayer at the Brookings Institution.
[Thanks to CP for bringing this to my attention.]
[Thanks to CP for bringing this to my attention.]
Monday, March 19, 2007
45% of first-time buyers put $0 down
According to the National Association of Realtors 45% of first-time buyers nationwide put no money down.
That's up from 42% the last time I posted the statistic back in March 2005.
Monday, March 12, 2007
Sunday, March 11, 2007
Collapse of Arthur Andersen LLP
To those who think that the destruction of Arthur Andersen was an over-reaction, keep in mind that we are not just talking about Enron. Arthur Andersen over its last few years also signed off on the extremely dirty books of Sunbeam, Waste Management, Global Crossing, Qwest, and (most appaling of all) WorldCom. This was clearly not just a few bad apples but a systemic cancer within a company that not that long ago was held up as the paragon of auditing ethics.
Staff:
Of course, the jewel of the crown was Arthur Andersen's tax practice, with its approximately 500 US partners, which was won by Deloitte Touche Tohmatsu in April 2002.
The other big ticket item in the collapse of Arthur Andersen LLP was that Robert Half International established the firm Protiviti by hiring more than 700 professionals from the risk consulting practice including more than 50 partners.
The rest of the firm was carved up like a Thanksgiving turkey...
Ernst & Young Acquires Arthur Andersen's Chesapeake Office - 350 employees including 39 partners.
Ernst & Young Acquires Pittsburgh Offce - 87 employees including 8 partners.
Ernst & Young Acquires Louisville Office - 45 employees including 3 partners.
Ernst & Young acquired the Financial and Commodities Risk Consulting and Financial Services practices of Arthur Andersen's Chicago office - 65 employees including 12 partners
Ernst & Young hired 78 Andersen staffers in Miami, Fort Lauderdale and West Palm Beach.
Ernst & Young acquired Ann Arbor, Grand Rapids and Toledo offices - 159 employees including 14 partners
Ernst & Young hires approximately 100 Arthur Andersen professionals including 6 partners from Andersen's Los Angeles, Denver, Phoenix, and San Diego practices.
Deloitte & Touche acquired about 950 staffers from the Chicago office, far more than any other Big Four firm.
Deloitte & Touche acquired 225 employees from the Milwaukee office
Deloitte & Touche acquired 50 employees from the Las Vegas office
Deloitte & Touche acquired the Minneapolis office - 229 employees including 16 partners
From the Atlanta office, Deloitte & Touche hired 359 employees including 39 partners, and Ernst & Young hired 51 employees including 5 partners
The Boston office was divided up between the Big Four - Ernst & Young signed up 15 partners, PricewaterhouseCoopers 5 partners, Deloitte & Touche 11 partners and KPMG 4 partners
KPMG picked up more than 200 employees and partners from the Seattle office
Grant Thornton picked up 50 employees including 6 partners from the New York office
Grant Thornton got 161 employees including 19 partners in Charlotte, Greensboro and Columbia
Grant Thornton buys Tulsa office with 35 employees
Huron Consulting Group was formed by 35 Andersen professionals, mostly from the financial consulting practice, in Chicago.
Keep in mind that this entire process was started in April and was completed by July. I did not think a company with 28,000 US employees (85,000 globally) could collapse in four months. If anybody has information on offices that are not listed here, I'd like to hear from you. In particular, I am interested in learning what happened to the rest of the NYC office.
Clients:
This list is entirely too long to reproduce in this blog since Arthur Andersen had almost 2500 clients. In this case, I will rely on internet links and hope they do not die on me.
http://www.accountingweb.com/cgi-bin/item.cgi?id=74745
http://www.forbes.com/2002/03/13/0313andersen.html
http://www.forbes.com/2002/06/28/0627andersen.html
Staff:
Of course, the jewel of the crown was Arthur Andersen's tax practice, with its approximately 500 US partners, which was won by Deloitte Touche Tohmatsu in April 2002.
The other big ticket item in the collapse of Arthur Andersen LLP was that Robert Half International established the firm Protiviti by hiring more than 700 professionals from the risk consulting practice including more than 50 partners.
The rest of the firm was carved up like a Thanksgiving turkey...
Ernst & Young Acquires Arthur Andersen's Chesapeake Office - 350 employees including 39 partners.
Ernst & Young Acquires Pittsburgh Offce - 87 employees including 8 partners.
Ernst & Young Acquires Louisville Office - 45 employees including 3 partners.
Ernst & Young acquired the Financial and Commodities Risk Consulting and Financial Services practices of Arthur Andersen's Chicago office - 65 employees including 12 partners
Ernst & Young hired 78 Andersen staffers in Miami, Fort Lauderdale and West Palm Beach.
Ernst & Young acquired Ann Arbor, Grand Rapids and Toledo offices - 159 employees including 14 partners
Ernst & Young hires approximately 100 Arthur Andersen professionals including 6 partners from Andersen's Los Angeles, Denver, Phoenix, and San Diego practices.
Deloitte & Touche acquired about 950 staffers from the Chicago office, far more than any other Big Four firm.
Deloitte & Touche acquired 225 employees from the Milwaukee office
Deloitte & Touche acquired 50 employees from the Las Vegas office
Deloitte & Touche acquired the Minneapolis office - 229 employees including 16 partners
From the Atlanta office, Deloitte & Touche hired 359 employees including 39 partners, and Ernst & Young hired 51 employees including 5 partners
The Boston office was divided up between the Big Four - Ernst & Young signed up 15 partners, PricewaterhouseCoopers 5 partners, Deloitte & Touche 11 partners and KPMG 4 partners
KPMG picked up more than 200 employees and partners from the Seattle office
Grant Thornton picked up 50 employees including 6 partners from the New York office
Grant Thornton got 161 employees including 19 partners in Charlotte, Greensboro and Columbia
Grant Thornton buys Tulsa office with 35 employees
Huron Consulting Group was formed by 35 Andersen professionals, mostly from the financial consulting practice, in Chicago.
Keep in mind that this entire process was started in April and was completed by July. I did not think a company with 28,000 US employees (85,000 globally) could collapse in four months. If anybody has information on offices that are not listed here, I'd like to hear from you. In particular, I am interested in learning what happened to the rest of the NYC office.
Clients:
This list is entirely too long to reproduce in this blog since Arthur Andersen had almost 2500 clients. In this case, I will rely on internet links and hope they do not die on me.
http://www.accountingweb.com/cgi-bin/item.cgi?id=74745
http://www.forbes.com/2002/03/13/0313andersen.html
http://www.forbes.com/2002/06/28/0627andersen.html
Collapse of Andersen Worldwide
Defections of Andersen's global affiliates
I would normally provide this information via a link, but I wanted the actual text documented here in case the link dies because this information is becoming increasingly difficult to find on the web.
Argentina 4/16/02 Plans to merge with Ernst & Young
Australia 3/28/02 Announces plans to merge with Ernst & Young
Baltic States 4/15/02 Announces plans to merge with Ernst & Young
Belgium 4/23/02 Announces plans to merge with Deloitte Touche Tohmatsu
Brazil 4/9/02 Announces plans to merge with Deloitte Touche Tohmatsu
Bulgaria 4/24/02 Announces plans to merge with Ernst & Young
Canada 4/12/02 Announces deal to merge with Deloitte Touche Tohmatsu
Chile 4/9/02 Announces plans to merge with Ernst & Young
China 3/22/02 Announces plans to merge with PricewaterhouseCoopers
Colombia 4/23/02 Announces plans to merge with Deloitte Touche Tohmatsu
Croatia 4/24/02 Announces plans to merge with Ernst & Young
Czech Republic 4/24/02 Announces plans to merge with Ernst & Young
France 4/16/02 Plans to merge with Ernst & Young
Germany 4/24/02 Plans to merge with Ernst & Young
Holland 4/24/02 Announces plans to merge with Deloitte Touche Tohmatsu
Hong Kong 3/22/02 Announces plans to merge with PricewaterhouseCoopers
Hungary 4/24/02 Announces plans to merge with Ernst & Young
India 5/4/02 Announces plans to merge with Ernst & Young
Indonesia 4/14/02 Announces plans to merge with Ernst & Young
Italy 4/23/02 Announces plans to merge with Deloitte Touche Tohmatsu
Japan 3/28/02 Announces plans to merge with KPMG
Mexico 4/9/02 Announces plans to merge with Deloitte Touche Tohmatsu
Middle East 4/22/02 Announces plans to merge with PricewaterhouseCoopers
Netherlands 4/22/02 Announces plans to merge with Deloitte Touche Tohmatsu
New Zealand 3/28/02 Announces plans to merge with Ernst & Young
Norway 4/9/02 Announces plans to merge with Ernst & Young
Phillipines 4/24/02 Announces plans to merge with Ernst & Young
Poland 4/9/02 Announces plans to merge with Ernst & Young
Portugal 4/9/02 Announces plans to merge with Deloitte Touche Tohmatsu
Romania 4/24/02 Announces plans to merge with Ernst & Young
Russia 3/22/02 Announces plans to merge with Ernst & Young
Singapore 4/3/02 Announces plans to merge with Ernst & Young
Slovakia 4/24/02 Announces plans to merge with Ernst & Young
Slovenia 4/24/02 Announces plans to merge with Ernst & Young
South Africa 4/11/02 Announces plans to merge with KPMG
Spain 4/3/02 Announces plans to merge with Deloitte Touche Tohmatsu
Sweden 4/22/02 Announces plans to merge with Deloitte Touche Tohmatsu
Switzerland 4/17/02 Announces plans to merge with Ernst & Young
Taiwan 4/11/02 Plans to merge with Deloitte,Touche Tohmatsu
Thailand 4/3/02 Reaffirms plans to merge with KPMG
United Kingdom 4/10/02 Announces plans to merge with Deloitte Touche Tohmatsu
Vietnam 5/10/02 In discussions to merge with KPMG
http://www.accountingweb.com/cgi-bin/item.cgi?id=76820
I would normally provide this information via a link, but I wanted the actual text documented here in case the link dies because this information is becoming increasingly difficult to find on the web.
Argentina 4/16/02 Plans to merge with Ernst & Young
Australia 3/28/02 Announces plans to merge with Ernst & Young
Baltic States 4/15/02 Announces plans to merge with Ernst & Young
Belgium 4/23/02 Announces plans to merge with Deloitte Touche Tohmatsu
Brazil 4/9/02 Announces plans to merge with Deloitte Touche Tohmatsu
Bulgaria 4/24/02 Announces plans to merge with Ernst & Young
Canada 4/12/02 Announces deal to merge with Deloitte Touche Tohmatsu
Chile 4/9/02 Announces plans to merge with Ernst & Young
China 3/22/02 Announces plans to merge with PricewaterhouseCoopers
Colombia 4/23/02 Announces plans to merge with Deloitte Touche Tohmatsu
Croatia 4/24/02 Announces plans to merge with Ernst & Young
Czech Republic 4/24/02 Announces plans to merge with Ernst & Young
France 4/16/02 Plans to merge with Ernst & Young
Germany 4/24/02 Plans to merge with Ernst & Young
Holland 4/24/02 Announces plans to merge with Deloitte Touche Tohmatsu
Hong Kong 3/22/02 Announces plans to merge with PricewaterhouseCoopers
Hungary 4/24/02 Announces plans to merge with Ernst & Young
India 5/4/02 Announces plans to merge with Ernst & Young
Indonesia 4/14/02 Announces plans to merge with Ernst & Young
Italy 4/23/02 Announces plans to merge with Deloitte Touche Tohmatsu
Japan 3/28/02 Announces plans to merge with KPMG
Mexico 4/9/02 Announces plans to merge with Deloitte Touche Tohmatsu
Middle East 4/22/02 Announces plans to merge with PricewaterhouseCoopers
Netherlands 4/22/02 Announces plans to merge with Deloitte Touche Tohmatsu
New Zealand 3/28/02 Announces plans to merge with Ernst & Young
Norway 4/9/02 Announces plans to merge with Ernst & Young
Phillipines 4/24/02 Announces plans to merge with Ernst & Young
Poland 4/9/02 Announces plans to merge with Ernst & Young
Portugal 4/9/02 Announces plans to merge with Deloitte Touche Tohmatsu
Romania 4/24/02 Announces plans to merge with Ernst & Young
Russia 3/22/02 Announces plans to merge with Ernst & Young
Singapore 4/3/02 Announces plans to merge with Ernst & Young
Slovakia 4/24/02 Announces plans to merge with Ernst & Young
Slovenia 4/24/02 Announces plans to merge with Ernst & Young
South Africa 4/11/02 Announces plans to merge with KPMG
Spain 4/3/02 Announces plans to merge with Deloitte Touche Tohmatsu
Sweden 4/22/02 Announces plans to merge with Deloitte Touche Tohmatsu
Switzerland 4/17/02 Announces plans to merge with Ernst & Young
Taiwan 4/11/02 Plans to merge with Deloitte,Touche Tohmatsu
Thailand 4/3/02 Reaffirms plans to merge with KPMG
United Kingdom 4/10/02 Announces plans to merge with Deloitte Touche Tohmatsu
Vietnam 5/10/02 In discussions to merge with KPMG
http://www.accountingweb.com/cgi-bin/item.cgi?id=76820
Saturday, February 24, 2007
Response to Comment
Any comments on how Unions caused problems in high costs? Japanese companies who have factories in America with no Unions seem to have a very good profit margin. I think Chrysler's workers did themselves and the company in. Any thoughts on comparing this to some airlines troubles? (Eastern, PanAm)
No question that the problems of GM, Ford and Chrysler are due to overly high compensation and benefits demanded by the union. For example, in 2005, GM’s US other postretirement employee benefits expense, consisting of retiree health care and life insurance, increased to $5.3 billion (that's HALF of GM's $10.6 billion loss right there).
However, it is too easy just to blame the unions. Past management (and here I mean as far back as the 50s) is also to blame in that it was far too easy to promise benefits that would be paid years later rather than wages that would have to be paid on the spot.
I agree that Japanese companies that have factories in the US with no unions indeed have a very good profit margin. Furthermore, it's worth noting that GM and Ford operations abroad are also much more profitable than their US operations. I've previously commented that if Ford could just make their US segment disappear they'd be in top-notch financial shape. This is the reason why I don't think GM would ever buy Chrysler. Folks who know a lot more about cars than me observe that the two companies' vehicle portfolios don't mesh well. And they are right. However, from a financial point of view it just wouldn't work out. GM has more than its fair share of "Detroit troubles" and has no business trying to take on Chrysler's very similar problems.
Your comment in comparing the automakers to airlines is quite insightful. Heavily unionized industries are all collapsing due to the unsustainable wage/benefit promises extracted from management by the unions. Steel, airlines, automakers. They're all going down for the same reasons.
No question that the problems of GM, Ford and Chrysler are due to overly high compensation and benefits demanded by the union. For example, in 2005, GM’s US other postretirement employee benefits expense, consisting of retiree health care and life insurance, increased to $5.3 billion (that's HALF of GM's $10.6 billion loss right there).
However, it is too easy just to blame the unions. Past management (and here I mean as far back as the 50s) is also to blame in that it was far too easy to promise benefits that would be paid years later rather than wages that would have to be paid on the spot.
I agree that Japanese companies that have factories in the US with no unions indeed have a very good profit margin. Furthermore, it's worth noting that GM and Ford operations abroad are also much more profitable than their US operations. I've previously commented that if Ford could just make their US segment disappear they'd be in top-notch financial shape. This is the reason why I don't think GM would ever buy Chrysler. Folks who know a lot more about cars than me observe that the two companies' vehicle portfolios don't mesh well. And they are right. However, from a financial point of view it just wouldn't work out. GM has more than its fair share of "Detroit troubles" and has no business trying to take on Chrysler's very similar problems.
Your comment in comparing the automakers to airlines is quite insightful. Heavily unionized industries are all collapsing due to the unsustainable wage/benefit promises extracted from management by the unions. Steel, airlines, automakers. They're all going down for the same reasons.
Friday, February 16, 2007
GM rumored to be in talks to buy Chrysler
I have of course been following the many reports of problems at the Chrysler unit of DaimlerChrysler including all the discussion about how the "merger of equals" was falling apart and Daimler was looking at "strategic opportunities" (translation: divestiture) for Chrysler. However, this story BLEW ME AWAY:
General Motors is in talks to buy the Chrysler Group in its entirety, Automotive News reported Friday, citing unnamed sources in Germany and the United States.
General Motors is in talks to buy the Chrysler Group in its entirety, Automotive News reported Friday, citing unnamed sources in Germany and the United States.
Friday, February 02, 2007
Tuesday, January 09, 2007
Bad News for Venezuela
Venezuelan President Hugo Chavez moves yesterday toward creating what he calls "21st Century Socialism" by vowing to nationalize Venezuela's biggest telecommunications and electricity companies, throw out its commercial code and strip its central bank of all remaining traces of its autonomy take his country straight towards communism.
Chavez vowed to nationalize both the country's largest publicly traded private company, Compania Nacional de Telefonos de Venezuela (CANTV) - owned by US-based Verizon Communications - and Electricidad de Caracas - owned by US-based AES. The choice of two US-owned companies won't be missed elsewhere in Latin America, where Chavez has struggled to persuade nations to follow his lead and not Washington's.
Consolidating his power politically, he also unveiled plans to join his coalition of center and leftist parties into a single party controlled by him called the United Venezuelan Socialist Party, a move seen as leading the country down the road to a single-party state.
[Source: WSJ]
Chavez vowed to nationalize both the country's largest publicly traded private company, Compania Nacional de Telefonos de Venezuela (CANTV) - owned by US-based Verizon Communications - and Electricidad de Caracas - owned by US-based AES. The choice of two US-owned companies won't be missed elsewhere in Latin America, where Chavez has struggled to persuade nations to follow his lead and not Washington's.
Consolidating his power politically, he also unveiled plans to join his coalition of center and leftist parties into a single party controlled by him called the United Venezuelan Socialist Party, a move seen as leading the country down the road to a single-party state.
[Source: WSJ]
Tuesday, December 19, 2006
Regulator Seeks Legal Action Against Fannie Mae Ex-Officials
The Office of Federal Housing Enterprise Oversight yesterday filed suit against three former Fannie Mae top executives to recover more than $115 million in pay they received because the company's earnings were misstated. The complaint alleges the three executives "improperly manipulated earnings to maximize their bonuses." The three executives maintain they have done nothing wrong and plan to fight. (In 2003, OFHEO filed similar charges against former top officials of Freddie Mac.)
Thursday, November 16, 2006
Thursday, October 26, 2006
Wednesday, September 06, 2006
New Ford CEO
CNN Money...
Ford Motor Company surprised the auto industry by tapping senior Boeing executive Alan Mulally as its new CEO, succeeding current CEO Bill Ford, who will stay on as chairman.
ABC News...
When Bill Ford decided that his family's company needed more leadership than he could offer, he started looking for someone who had successfully fixed a large but troubled manufacturing company. He wasn't sure there was such a person, but as he asked around in and out of the auto industry, one name kept popping up: Alan Mulally, EVP of The Boeing Company [and President and CEO of Boeing Commercial Airplanes]. [...] Mulally was widely praised for being a key architect of the resurgence of Boeing's commercial airplanes unit over the past couple of years.
Ford Motor Company surprised the auto industry by tapping senior Boeing executive Alan Mulally as its new CEO, succeeding current CEO Bill Ford, who will stay on as chairman.
ABC News...
When Bill Ford decided that his family's company needed more leadership than he could offer, he started looking for someone who had successfully fixed a large but troubled manufacturing company. He wasn't sure there was such a person, but as he asked around in and out of the auto industry, one name kept popping up: Alan Mulally, EVP of The Boeing Company [and President and CEO of Boeing Commercial Airplanes]. [...] Mulally was widely praised for being a key architect of the resurgence of Boeing's commercial airplanes unit over the past couple of years.
Thursday, August 31, 2006
Ford - August was a bad month
Toyota Surpasses Ford
Toyota Motor surpassed struggling Ford Motor in July to rank as the second-biggest-selling auto company in the United States, behind General Motors, sales figures showed. Toyota's victory over Ford was slim, just 487 vehicles. Toyota sold 241,826, up 16.2%, while Ford's sales dropped 32% to 241,339. Three months ago, Toyota passed DaimlerChrysler to rank as the third-biggest company in terms of American sales.
Note: The story has a huge error. It says that Toyota's sales in July gave it 16.2% of the American market compared with 15.9% for Ford. That is absolutely not correct; the margin of 487 vehicles represents a gap of 0.03% not 0.3%.
Ford Cuts Production
Toyota Motor surpassed struggling Ford Motor in July to rank as the second-biggest-selling auto company in the United States, behind General Motors, sales figures showed. Toyota's victory over Ford was slim, just 487 vehicles. Toyota sold 241,826, up 16.2%, while Ford's sales dropped 32% to 241,339. Three months ago, Toyota passed DaimlerChrysler to rank as the third-biggest company in terms of American sales.
Note: The story has a huge error. It says that Toyota's sales in July gave it 16.2% of the American market compared with 15.9% for Ford. That is absolutely not correct; the margin of 487 vehicles represents a gap of 0.03% not 0.3%.
Ford Cuts Production
Saturday, July 01, 2006
Haven't we already been down this path?
AT&T Launches Its Cable Foray With TV Service
The new AT&T made its new television service available to thousands of San Antonio consumers, kicking off a battle against cable rivals that could result in lower prices for TV, Internet and phone services.
With prices starting at $59 a month, AT&T's initial packages are roughly on par with those of cable, but the phone company says it offers more services for that price, including faster channel surfing, three set-top boxes, an interactive program guide and digital video recorder. Until this week AT&T offered its TV service to only a few hundred consumers in San Antonio. The wider rollout in that area is the precursor to offering the service in 15 to 20 markets by year's end. Eventually the service will be available to 19 million homes. For consumers, increased competition could mean better TV deals, especially if they buy the service packaged with phone or Internet service. Time Warner, AT&T's main cable competitor in San Antonio, says it has no plans to change its prices.
Analysts predict cable companies will lower the cost of their service if they see AT&T begin to win over their customers. Still, other experts say AT&T's television service may consistently be priced a bit higher than cable TV because the very few customers for the nascent service drive up its programming costs. "It'll hasten the advent of bundling as the way to get the best price for a consumer, but is it going to be transformative to your cable bill? Probably not," said Craig Moffett, an analyst with Sanford Bernstein. AT&T's pricing for San Antonio is similar to that of its main cable competitor for the most part but cable offers more general channels and more features such as high-definition television.
AT&T's midrange plan for its TV service, which it calls U-Verse, offers 150 channels plus 31 premium movie channels such as Starz, Showtime and Encore for $79 a month. AT&T's marketing materials promote TV bundled with high-speed Internet, and customers who sign up for both are eligible to receive both services for $10 to $25 a month for the first three months of service, depending on which package they choose. Next month AT&T plans to launch Homezone, which will combine satellite TV from EchoStar with videos and movies from the Internet, according to people familiar with the new offering.
The new AT&T made its new television service available to thousands of San Antonio consumers, kicking off a battle against cable rivals that could result in lower prices for TV, Internet and phone services.
With prices starting at $59 a month, AT&T's initial packages are roughly on par with those of cable, but the phone company says it offers more services for that price, including faster channel surfing, three set-top boxes, an interactive program guide and digital video recorder. Until this week AT&T offered its TV service to only a few hundred consumers in San Antonio. The wider rollout in that area is the precursor to offering the service in 15 to 20 markets by year's end. Eventually the service will be available to 19 million homes. For consumers, increased competition could mean better TV deals, especially if they buy the service packaged with phone or Internet service. Time Warner, AT&T's main cable competitor in San Antonio, says it has no plans to change its prices.
Analysts predict cable companies will lower the cost of their service if they see AT&T begin to win over their customers. Still, other experts say AT&T's television service may consistently be priced a bit higher than cable TV because the very few customers for the nascent service drive up its programming costs. "It'll hasten the advent of bundling as the way to get the best price for a consumer, but is it going to be transformative to your cable bill? Probably not," said Craig Moffett, an analyst with Sanford Bernstein. AT&T's pricing for San Antonio is similar to that of its main cable competitor for the most part but cable offers more general channels and more features such as high-definition television.
AT&T's midrange plan for its TV service, which it calls U-Verse, offers 150 channels plus 31 premium movie channels such as Starz, Showtime and Encore for $79 a month. AT&T's marketing materials promote TV bundled with high-speed Internet, and customers who sign up for both are eligible to receive both services for $10 to $25 a month for the first three months of service, depending on which package they choose. Next month AT&T plans to launch Homezone, which will combine satellite TV from EchoStar with videos and movies from the Internet, according to people familiar with the new offering.
Thursday, June 22, 2006
Foreclosure rates up
The foreclosure rate national average is 1.1%, with the following states having above average rates.
Georgia 3.1%
Colorado 2.9%
Indiana 2.4%
Nevada 2.3%
Michigan 2.2%
Texas 2.0%
Ohio 1.9%
Tennessee 1.9%
Utah 1.9%
Florida 1.6%
New Jersey 1.3%
Oklahoma 1.3%
Arkansas 1.3%
Arizona 1.1%
Illinois 1.1%
Georgia 3.1%
Colorado 2.9%
Indiana 2.4%
Nevada 2.3%
Michigan 2.2%
Texas 2.0%
Ohio 1.9%
Tennessee 1.9%
Utah 1.9%
Florida 1.6%
New Jersey 1.3%
Oklahoma 1.3%
Arkansas 1.3%
Arizona 1.1%
Illinois 1.1%
Delinquency rates up
The national average is 4.41%, so states in white have delinquency rates at or below the national average.
Subscribe to:
Posts (Atom)
