Monthly Archives: May 2008

John Gapper

I’m on holiday for the next couple of weeks and so will not be posting here unless my plans are interrupted by unforeseen events. I intend to return to duty on June 2.

John Gapper

What price the General Electric name? Pretty high, I would suspect, and extremely tempting for an Asian manufacturer of washing machines and air conditioners that wants to build a global business.

GE confirmed this morning that it is “reviewing strategic options” for its consumer appliances division. I guess that, in this context, “reviewing strategic options” must mean “selling, but perhaps holding on to a little stake”.

Its reasoning is interesting because it tells you all you need to know about how Asian manufacturers now dominate the consumer appliance market. Here is part of Jeff Immelt’s statement:

It remains primarily a U.S. business, meaning its fortunes are tied to the rise and fall of a single market. We want to make this good business great again by finding the right strategic solution – a solution that will give Appliances the global reach and investment required to compete more effectively.

This is one of those statements that makes a great deal of sense looked at from one perspective, and no sense whatever looked at another way. Read more

John Gapper


My FT column this week is on the London premiere of Sex and the City and what it, and the show, says about the future of film and television. You can read it here and comment below.

John Gapper

Jack Welch noted the other day that: “Nothing is as disgusting to me as some old CEO chirping away about how things are not as good under the new guy as they were under him.”

Mr Welch, the former chairman and chief executive of General Electric, must be disgusted at the moment. The turmoil in markets is bringing out quite a few former chief executives to kvetch about their successors.

The latest is Hank Greenberg, the former chief executive, and all-round dominant figure, at American International Group. Since his departure in 2005, he has been disgruntled but he has now blown his top in a letter to AIG directors.

Several top shareholders of AIG have called me expressing deep concern about the persistent and seemingly endless destruction of value at AIG. They, and I, are deeply distressed by the excessive loss of value . . . US life operations are stagnant, the company has lost its leading and unique market positions in China and Japan . . . in the more than three years since I left, AIG has added 24,000 employees . . . the equivalent of two Army divisions.

Mr Greenberg has a point that Martin Sullivan, his chosen successor, could have done better. But, in general, I think this is a case of a dominant chief executive building a business that no-one else could hope to control adequately and bequeathing to the new CEO a poisoned chalice. Read more

John Gapper

It can be unnerving to talk to Jim Buckmaster, the chief executive of Craigslist, particularly if you work for a newspaper. I did so once, in his apartment in San Francisco, and it was a memorable experience.

It was partly because of what he said – essentially that the online classified ads venture founded by the eponymous Craig Newmark would continue to scoop up the advertising that used to be the lifeblood of city and local papers.

It was also because Mr Buckmaster talks a bit like the leader of a cult. When asked why Craigslist is doing something – or is not – he tends to gaze into the distance and claim merely to be following the wishes of users. Read more

John Gapper

The move by the state of Massachusetts to impose a 2.5 per cent tax on its biggest university endowments is causing an outcry. It is not surprising, given what is at stake for Harvard’s $36bn foundation.

The debate was reported in the Wall Street Journal on Friday after rumbling along in the state’s media and in higher education circles this month. State politicians are feeling the budgetary pinch and have put forward a bill to levy universities in the state that have endowments of more than $1bn.

At the moment, although universities such as Harvard and Yale can be regarded as some of the world’s biggest hedge funds, they have tax-exempt status. They do not even have to meet the requirement on other non-profit foundations in the US to distribute 5 per cent of their capital each year.

I think it is a bad idea, for reasons I will come to. And, surprise, surprise, there are plenty of Harvard economists who think so, including Greg Mankiw. But before I say why, it is worth acknowledging the arguments in favour. Read more

John Gapper

I can’t say I agree with Felix Salmon and John Carney that the most interesting anecdote in the great New York Times piece about the feud between Alan Greenberg and Jimmy Cayne at Bear Stearns was the following:

The final straw for Mr Cayne was Mr Greenberg’s decision to charge Mr Cayne a commission of $77,000 for the sale of his six million shares of Bear stock, a rate far above the maximum $2,500 commission that employees pay for a single trade. Since Mr Cayne was not an employee anymore, he did not deserve such a rate, Mr Greenberg said. “If he doesn’t like it, he should do his future business elsewhere,” he added.

 Read more

John Gapper

I always look out for pieces written by Malcolm Gladwell in The New Yorker, who was noted the other day in the Wall Street Journal as one of the world’s leading business pundits. They tend to be intriguing, clever, full of great anecdotes and thoroughly enjoyable.

He is also, of course, the author of the best-sellers The Tipping Point, and Blink, which are both wonderful reads.

All the same, Gladwell has come under some scrutiny for allegedly, how to put this, making the best of his stories. That is to say, contriving that his evidence fits his latest all-encompassing theory a little too neatly. Read more

John Gapper


My FT column this week is on the problems of US infrastructure – particularly transport-related infrastructure – and why the country needs to do something about them. You can read it here and post comments below.

John Gapper

I cannot say that I was keen on New York City passing a law to force fast food restaurants to post the number of calories on the food items they sell. It struck me as a single state initiative that would cause of lot of bureaucratic difficulty for no very good reason.

Still, I am intrigued by the results, now that outlets have started to comply, and by the lesson that one’s instincts about which foods are calorie-rich are not always accurate. Read more

John Gapper

Every so often, a product comes along that everyone expects to be a pathetic failure but turns out to be rather good. I would put in that category the internet replay services offered by broadcasters in the UK and the US.

The US product is Hulu, a video service offered by NBC Universal and Fox on which one can watch full-length replays of television programmes made by the two broadacasters as well as a few films.

The UK product is iPlayer, the internet service offered by the BBC which is becoming so popular that one or two internet service providers have protested that it is taking up too much bandwidth.

I cannot vouch for iPlayer because I live in New York and am barred from using it but I did use Hulu the other night to watch a couple of past episodes of 30 Rock and I have to report that the experience was a pleasure. Read more