Monday, August 25, 2008

What an attitude!

Motorola has to move beyond ‘just’ handsets if it has to treat its plummetting share prices & market share issues

“Motorola has an attitude problem. It thinks it is an amazing company with amazing products. The only problem is that its customers don’t agree,” asserts a confident Jeff Kagan, Telecom Anaylst & Expert. Well, we don’t want to agree outrightly, but beg to add – even investors don’t! Look at its share price on NYSE. ‘Accelerating downhill’ is perhaps the only words you’d use to explain its movement; currently at $16.30 (as on December 10, 2007) – and simply sad days with its share price hitting the lowest levels in 7 years! And this was also confirmed by Gartner Inc on November 27, 2007 when it disclosed how Motorola’s mobile handset global market share had slipped to 13.1% during Q3 2007 from 20.7% during the previous year. The Gartner revelation was followed by Edward Zander’s announcement of an exit on November 30. 2007, alongwith Padmasree Warrior, the CTO – two chiefs who had led Motorola’s revival in the past.

So has the Moto boat hit the rough seas? As per a telecom analyst, “Motorola has once again lost its way. This happened in the 1990’s when the networks switched to digital. That’s when Nokia took the lead.” And what does its financials reveal? Sadly, nothing different! With revenues earned during Q3 2007 touching just $88.11 billion, representing a y-o-y decline of 16.9% and with a lack of a “must have” product felt, Motorola surely has a tough job up its sleeve as Jeff agrees, “Motorola has to break some new ground. We have not seen anything along those lines yet.” Evidently, there’s some ray of hope at the end of the tunnel with Motorola’s announcement on December 6, 2007 that its forecast for Q4 2007 earnings still remain positive as Tom Meredith, CFO, Motorola Inc. declared: “a continuing operational earnings forecast of $0.12-0.14 cents per share”. Surely, Motorola has to move beyond just delivering a killer handset. It has to necessarily focus on its other more successful arms like home and networks mobility and enterprise mobility (its 2nd and 3rd largest units), which allow the company to fall back on other sources of revenue. Clearly, for now, Motorola needs to get ‘stuck’ things ‘rolling’...

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IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Wednesday, August 20, 2008

Annapolis – where them desperate souls meet!

The Annapolis conference won t create miracles, but can provide the right impetus

The Palestinians are the cause of exiting and ex-presidents. There’s no real electoral payback anticipated in supporting them. Jews and Israel-loving evangelicals dwarf any Arab lobby to the extent that it’s not even funny. President Bush is now on the exit track. And it’s time to rectify the fundamental error he had made in allowing the war-on-terror rhetoric to wrongly discredit the Palestinian national movement.

His best hope in Annapolis may be the Texas connection. If Bush gets behind Salam Fayyad, the Palestinian prime minister who attended the University of Texas, things may finally move on this front. But for that to happen, he has to stick with him. Fayyad, 55, is the can-do face of the Palestinian movement. Just like his people, he’s long been in the wilderness. Unlike many of them, he hasn’t succumbed to the culture of the victim. “One year,” he said in an hour-long conversation, “is more than adequate to come to a peace treaty and end this conflict.”

In seven years in office, Bush has been, in fact, quite uninterested in such an ending. He has hallucinated about roads from Baghdad to Jerusalem. He also talked about two states and later lost interest in the initiative. The American Middle East policy has, in fact, been quite distracted and unbalanced on the whole. Now, overcoming his Clinton angst, Bush has summoned the parties to Annapolis, Md. But clearly, it’s happening too late in the day. The rising Middle Eastern power, Iran, has not been invited to the conference. Nor has the Hamas. What’s instead present, and that too in abundance, is desperation. Bush must use it.

The Palestinians, on one hand, are desperate because they are now looking at a dead end. They’ve been the losers over six decades of strife, through ineptitude, corruption & Arab hypocrisy, apart from their susceptibility to victims’ hollow consolations. As Fayyad had earlier noted, “Last year more than 50,000 Palestinians emigrated. How is that consistent with ending the occupation?”

The Israeli desperation, on the other hand, is relatively quieter. The economy has indeed blossomed, but not the Israeli soul. Four decades of occupation since the 1967 war have been a scourge for the country. Jewish precariousness still persists. The diaspora Jew did not go to Zion to build the Jew among nations.

Bush faces Palestinian weakness and compromised Israeli strength. He must offset the weakness by standing with the Palestinians on core demands. He must insist on Israeli sacrifice – territorial and ideological – in the name of US-guaranteed security. “Without peace,” Bush should tell the Israelis, “the Arab birth rate and the jihadist tide will eventually wash over you.”

Fayyad told me he’s coming into the conference Tuesday “disappointed that more progress has not been made.” On core issues – Jerusalem, borders, settlements – the impasse has prevailed. Annapolis can solve nothing actually; all it can do, realistically speaking, is to jump-start an intense process.

That process then needs essentially three elements, Fayyad told me. First, there should be an explicit framing within the context of UN Security Council resolutions, including 242, that makes clear Israel’s obligation to, in Fayyad’s words, “end the occupation that began in 1967.” Second, the Annapolis conference must result in an Israeli commitment to freeze the West Bank settlements and to remove illegal settler outposts, which will be paralleled by Palestinian commitments to “institution building and fighting terrorism.” Third, “we must get a reference to a timeline, a conclusion of final status peace within the Bush presidency.” Fayyad is right. A return to the 1967 lines, plus or minus agreed swaps, is the only plausible basis for a two-state accord. An Israeli settlement freeze is the first step to a Palestinian buy-in. A time table is the anchor all the talking needs. I asked Fayyad how he’d reassure Israel about security. He became animated. “Political pluralism is fine, but I can’t tolerate security pluralism. There’s no such thing as militias running around taking decisions! That has led to catastrophe. Law and order is basic. I said in a speech the other day that Nablus is more important than Annapolis! It is. The people of Nablus need security, just like Israelis.”
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IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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Wednesday, August 13, 2008

Wikipedia lists

Get onto a website called www.massively.com, which chronicles happenings in MMORPGs and you will realize how many of these are actually out there. For it’s not just Second Life, but more like There (www.there.com), World of Warcraft, Tabula Rasa et al creating the buzz. In fact, Wikipedia lists at least fifty of them on its MMORPGs page. At the last count, there were over 10 million people across the world registered with some MMORPG. And this number is doubling every year. The addiction is allegedly far worse than drugs or junk food. So what is this attraction based on? Well, first, an online 3D virtual world allows you to hide behind the screen and be just about anybody. You can make your deepest desires come true in a virtual world. This is the single most important driving factor behind this revolution.

I may be a lowly clerk pushing paper in a government office by day; but once online, I can be a super-hero who is always surrounded by beautiful women. Technology has made it as simple as using the mouse and keyboard to make the transition. And society, as we know it, will undergo a change never seen before. There are now people in Second Life who have already quit their day jobs and are making a healthy living in-world. They are earning more money than they did in their real world jobs. People could get married without ever meeting each other in real life and disgruntled wives could be suing their husbands for having affairs with the queen of Gunthor who has a perfect ten figure and the voice of a nightingale. Divorce law could well change to include virtual cheating. Government bodies may end up creating policies – and law enforcement agencies could come up – just to control crime in virtual worlds. Police personnel, who don’t use actual guns or handcuffs, will be patrolling the streets of a digital space that exists only in wires and cables. And avatars (your online being) will go to jail for stealing virtual works of art from a virtual museum. What I am trying to say is that sooner or later, they will pull out the ‘G’ from MMORPG; and it will imitate life itself.

But before we look into the future of these virtual worlds, let us understand how the underlying framework of Virtual Reality (VR) technology is changing over time. Virtual Reality is not a computer, but a technology that uses computerized clothing to synthesize reality. It has been around for more than two decades now mostly in the military and university laboratories.

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IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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ZEE BUSINESS BEST B SCHOOL SURVEY
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Monday, August 11, 2008

Great insecurity among end consumers

As a result, there is great insecurity among end consumers, who have found their money incomes depleted with respect to purchasing power. As per a survey by National Association of Convenience Stores, 45% of American consumers reported a decline in spending power due to rising petrol prices. While 19% wanted to buy more fuel efficient cars, an astonishing 13% had already reduced their driving on the back of $3/ gallon gasoline prices! As a result of earlier oil shocks, consumers have increasingly adapted an ‘aftermath attitude’ and eventual demands for automobiles have sagged significantly through out the world. A total of 38,214 hybrids were sold in the American market alone in March 2008, proof that these cars are now being perceived as a value proposition that’s beyond ‘fashion’.

Oil prices are very sensitively balanced as incremental spare capacity (according to some sources) is limited and there is a general perception toward a future oil deficit. To rein in this monster, one needs to first answer the question as to who is the culprit?

If you think rising consumption is to blame, hold your horses. According to OPEC estimates, the organisation’s proven reserves are expected to be somewhere close to 900 billion barrels and conventional sources are secure. Contributing close to 77% of all reserves, OPEC is the primary body controlling the world’s major oil sites.

Major members are Middle Eastern sates such as Iran, Iraq, Saudi Arabia, UAE and Kuwait. Various other regions are also represented in the organisation; countries like Venezuela, Indonesia and Nigeria are among major members as well. Thus, as a holistic approach towards understanding the oil crises spread across the planet, it is important to understand the composition of OPEC first. According to OPEC facts & figures, “The world’s Ultimately Recoverable Reserves (URR) is to continue to increase in the near future.

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IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative
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ZEE BUSINESS BEST B SCHOOL SURVEY
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IIPM in Financial times (Print Version)
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The Indian Institute of Planning and Management (IIPM)
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Thursday, August 07, 2008

Sambit Mohanty (30), Leo Burnett


IIPM Ranked No. 1 B-School In Global Exposre - Zee...

Sambit Mohanty (30), Leo Burnett. He’s won a New York silver and a Abby gold. He’s been a finalist at the Cannes too. A student of journalism and advertising, he is of the opinion that creativity never happens to anybody by intention. It is mostly by accident. But for him, it was actually a mixture of both. He had no clue what creativity was, when he came to Delhi to prepare for his civil services exams. And before he knew, he landed up at IIMC, where he found his true calling. “That time I figured that there is something called creativity. I was completely oblivious of the term earlier,” he says. After starting his career at McCann Erickson, he’s had stints at Lowe, Publicis and Vyas Giannetti. Sambit has worked for a range of products like Dettol, Mortein, Cherry Blossom and India Today. He’s had a busy few months recently, with the launch campaign for the introduction of Chevy Spark, the Minute Maid ad campaign (Where’s the pulp), and lastly the fiery Thums Up-Akshay Kumar ad. But the real high in his life was when after seeing the Cherry Blossom ad, ad guru Alyque Padamsee himself called up the McCann office to congratulate him.

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Source : IIPM Editorial, 2008

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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Tuesday, August 05, 2008

Components requirements

There is another pressure on the new aspirants, their foreign touch aggravating their troubles. Ashok Jainani, Head (Research), KSL India critically divulges, “Of all the information available, Bajaj wouldn’t be able to compete with Nano, for lack of expertise and components requirements. Moreover, payment of royalties to foreign collaborators puts Bajaj and Hero Group on the backfoot; something that Tata need not bother about.” To add to the chaos, Bajaj will also face pressure from auto-component suppliers. Recently, Minda and Sona which are scheduled to supply parts for Nano production lately cried hoarse over costing pressures and asked Tata to increase the price of Nano, to give them better margins.

If the two are successful, India will have its first two companies that have a presence in both two wheelers and four wheelers – a lethal combination. A complete metamorphosis into four wheels-making however is not to be expected as Jainani forecasts, “At the moment, I don’t see them getting completely into four wheelers as there will always be a new set of target audience for the two wheeler industry.” Surely, for the moment, Bajaj and Hero Group are not bidding goodbye to Street Hawk; Knight Rider is just a part of their on-road strategy.

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Source :
IIPM Editorial, 2008

An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

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ZEE BUSINESS BEST B SCHOOL SURVEY
B-schooled in India, Placed Abroad (Print Version)
IIPM in Financial times (Print Version)
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Monday, August 04, 2008

Citigroup is claiming its international operations

While the Citigroup is claiming that its international operations are running smoothly, one must go through the Indian example before believing the same. The scene in India is not at all enticing. Though most banks have raised their minimum annual income criteria for a credit card to Rs.1,20,000 from Rs.80,000 and the know-your-customer (KYC) norms have become more stringent, the total amount under credit cards default stands close to Rs.200 billion, data from Credit Information Bureau of India reveals. Probably such kind of data might have scared the officials at Citigroup. As during March 2008, speculations were rife that Citigroup may sell-off CitiFinancial, a NBFC, which belongs to the group. Once considered to be the most aggressive sub-prime lender in India the NBFC was forced to change its norms and issue only collateral backed loans. On the other hand Citibank has also tightened its norms for issuing credit cards and now-a-days is focussing more on financing consumer durables and two-wheelers through credit cards. In rest of the markets Citigroup is now taking a cautious approach.

However, it’s a fact that the company might have suffered huge losses in its investment banking arm, but substantial measures have been adopted to improve the company’s financial health. “Citigroup’s capital position improved noticeably in the past seven months because the company has issued over $30 billion in regulatory capital”, reveals a report published by Moodys, a leading credit rating agency.

But still one question remains to be answered. Will this huge credit card default lead to another financial crisis or it can still be avoided? If one believes Tim Westrich it can actually be avoided. As per him, “Implement a credit card safety rating system that can give consumers better information about their credit cards and thus help them make better decisions. In addition to a credit card safety rating system government should go further to mandate a higher level of fairness in credit card terms.” Or else, well...umm... get ready.

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Source :
IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative

Friday, August 01, 2008

Highest bid possible

The M&A folks of any business are always supposed to solicit the highest bid possible. Plus, with companies like Google, as well as aggressive PE groups, there is always that theoretical chance that something more desirable for Yahoo! would emerge. It may be more an issue of Yahoo!’s management really believing that there is great upside potential if the company remains independent and not wanting to transfer that potential to Microsoft regardless of price. “If it were ever put to a shareholder vote, however, I imagine shareholders would look at the situation much differently and line up in overwhelming numbers in support of a sale to Microsoft”, feels Richard.

At the end of it all, Microsoft is in too strong a position and Yahoo! in too weak a position for the latter to fend off Microsoft’s overtures indefinitely. “Microsoft may have to increase its bid by a dollar or two per share to get the deal done, but I suspect that it will ultimately prevail in this takeover battle,” concludes Richard. A Google-Yahoo! merger has way too much antitrust risk to even consider absent major divestitures, and an independent Yahoo! has been losing a several year battle to both Google and Microsoft. “Ultimately, I believe a lot of this will come down to antitrust issues - would regulators approve Microsoft-Yahoo! merger, and how should those two parties allocate the risk in case regulators either do not approve the deal or require significant divestiture,” says Marc.

To sum up, if Yahoo! posts better Q1 results, it may be able to put up a better case in front of its shareholders for now; but the key consideration is whether the company is ready for plan B, that is standing on its own if need be, since that could very much be a possibility now.

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Source :
IIPM Editorial, 2008
An IIPM and Professor Arindam Chaudhuri (Renowned Management Guru and Economist) Initiative