Monthly Archives: April 2011

Simon Murray is a straight talker. That is the best that can be said for the interview given by the new chairman of the Switzerland-based commodities company Glencore this week. After describing his native England as “economically absolutely shambolic” the 71-year-old gave his crusty opinions on women’s attitudes to work.

John Gapper

The first thing that strikes me in the scathing report of the Berkshire Hathaway audit committee on David Sokol, the senior executive who resigned last month, is that the thin defence of his conduct offered by Warren Buffett at the time has evaporated.

The second is that it makes Warren Buffett’s initial press release on Mr Sokol look distinctly economical with the truth. It will make for an interesting question and answer session at Berkshire’s annual shareholders’ meeting this weekend.

Here is my column at the time on the subject of Mr Sokol’s trading in Lubrizol shares before the company was acquired by Berkshire:

Mr Buffett provided a pre-emptive judgment on Mr Sokol’s behaviour last year in a memo to Berkshire’s managers and directors, including Mr Sokol. “If you see anything whose propriety or legality causes you to hesitate, give me a call,” he wrote. “If it’s questionable whether some action is close to the line, just assume it is outside and forget it.”

That is clearer than the mealy-mouthed half-defence of Mr Sokol offered by Mr Buffett in the statement announcing his departure. “Neither Dave nor I feel his Lubrizol purchases were in any way unlawful. He has told me that they were not a factor in his decision to resign.” Not unlawful? When Mr Buffett fails to mention ethics, something is up.

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Andrew Hill

One of Nokia’s biggest challenges is to maintain its home-grown Symbian operating system, while simultaneously producing attractive Windows-run smartphones under its brand-new partnership with Microsoft. Exactly how that would be done was one of the questions I couldn’t yet answer in my recent two-part analysis of Nokia’s future.

It turns out the challenge will be met, in part, by offloading it onto Accenture. On Wednesday, Nokia announced that 3,000 staff – mainly Symbian software engineers – would transfer to the consultancy (an additional 4,000 jobs will be lost across Nokia).

I don’t know what the Finnish for “hot potato” is, but Accenture has been handed one. Read more

Andrew Hill

Sony’s launch of its first tablet devices is bound to excite unflattering comparisons with revolutionary Sony products of the past – particularly because it falls in the same week as the death of Norio Ohga, the Japanese company’s former chairman and chief executive.

As every retrospective of Ohga’s extraordinary life has pointed out, he was the Sony executive who helped establish and drive the compact disc. By contrast, Sony’s “S1″ and “S2″ (their temporary names, thank goodness), already seem doomed to be mere “iPad rivals”. Read more

John Gapper

General Motors’ plan to give “a higher profile” to its Chevrolet brand makes lots of sense, given that Chevrolet is the equivalent of the Toyota brand – a volume marque around which other brands are arrayed. But why stop there?

It is increasingly odd for GM, which has been attacking its brand proliferation in the US, to have different brands around the world for its volume cars – Vauxhall in the UK, Opel in Germany and Holden in Australia.

The company has already taken the logical step of losing the GM Daewoo name in South Korea and adopting Chevrolet instead. Why not bite the bullet and do that same in other countries? Read more

Andrew Hill

Sir John Parker’s arrival as chairman of Anglo American in 2009 may well have changed the miner’s destiny. He steadied the ship, stood in the way of a potential bid from rival Xstrata, and threw his weight behind chief executive Cynthia Carroll, who was under intense pressure. All this looks like evidence of the Northern Irishman’s legendary toughness. Except Sir John himself says he’s not tough.

In my latest Turning Points interview, he describes himself rather differently – as a believer in discipline (learnt on the family farm where he was brought up) prepared to be tough only where necessary. Read more

John Gapper

A privacy storm has blown up over the revelation (if that is the right word) that iPhones and 3G iPads keeps data on the movements of their owners, which is backed up to personal computers when the devices are synchronised.

Al Franken, the Minnesota senator, has already complained about this fact, pointing out that:

“Anyone who gains access to this single file could likely determine the location of the user’s home, the businesses he frequents, the doctors he visits, the schools his children attend and the trips he has taken over the past months or even a year.”

Two researchers announced their findings on iPhone tracking data at a conference on Wednesday, only to be criticised by another one on the grounds that they were not saying anything new.

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John Gapper

Since it has been a public company, Google has stuck to a virtuous policy of not playing the Wall Street game by refusing to give earnings guidance. It is now suffering Wall Street’s revenge.

The harsh analysts’ reaction to Google’s recent earnings announcement – the first since Larry Page became its solo chief executive – compared with analysts’ enthusiasm about Apple’s earnings shows what Mr Page is up against.

In contrast to Google, Apple blatantly tries to set earning expectations low enough that it will “beat the Street” each time. It did so spectacularly with its second quarter earnings announcement on Wednesday. Read more

Nine years ago, when he was chief executive of Sprint, Bill Esrey told me how he and his team had strained to match WorldCom’s impressive quarter-on-quarter profit growth. They could not, and they later found out why: Sprint’s arch-rival had been inflating its income by manipulating its reserves in an $11bn fraud that dumped its chief executive Bernie Ebbers into jail and the company into bankruptcy protection.

John Gapper

Huawei’s attempt to soothe fears about the US government and investors about its corporate governance by disclosing the names of its board members – not too radical a step, one might think – begs some questions.

Huawei has two image problems – its links to the Chinese government and People’s Liberation Army, and the degree to which the family of Ren Zhengfei, its founder and chief executive, are involved in running the business. Mr Ren is a fomer PLA engineer. Read more

One day in early February, Samuli Nyyssonen of Nokia boarded a plane in Bangalore working for one company and disembarked in Helsinki working for another.

While the software engineer was in the air on February 11, Stephen Elop, the company’s chief executive, had told its 130,000 employees about a sharp change of strategic direction. Nokia would ally with Microsoft in smartphones, while at the same time boosting the group’s basic phone business in an effort to reach the “next billion” users. Read more

Sir John Vickers seemed irritated this week by the reaction to the interim report of the Independent Commission on Banking. Shares in banks rose on relief that its proposal to ringfence retail banks from investment banks were not more harsh, while Bob Diamond, chief executive of Barclays, made no repeat of his past threats to resettle his bank elsewhere.

Andrew Hill

There is no doubting Stephen Elop and his lieutenants’ resolve to rebuild the mobile phone company’s platform, having declared that it is burning. But having interviewed the chief executive and some of his leadership team – as well as current and former staff – for my two-part analysis of the company’s management challenges, I’m left with a nagging question: is the crisis at Nokia grave enough to trigger the necessary cultural and behavioural change at the Finnish group?

It remains a profitable company, with a strong balance sheet and the largest share of mobile phones by units shipped. Barely five years ago, it was riding high, the darling of business school professors and commentators, and that good feeling is hard for veteran Nokians to forget. Read more

Perspiring slightly under the arc-lights of an in-house television crew, Stephen Elop, Nokia’s chief executive, is about to deliver for the 10th time his “town hall” address to staff. He must sell to them the most radical strategy change since the historic tyres-to-timber Finnish conglomerate turned itself into the world’s leading mobile phone company in the 1990s.

John Gapper

It feels as if Wall Street is moving westward, and that US investors, having been caught up in the mortgage boom, have instead turned their attention to the opportunities on the west coast.

The National Venture Capital Association has unveiled figures showing that the industry had its best start to the year in terms of fund-raising since 2001, raising about $7.1bn in the first quarter.

Meanwhile, Matthew Garrahan writes in the FT about the keiretsu-like Raine merchant bank, which is raising $500m from a range of Illuminati from Silicon Valley and Hollywood including Eric Schmidt of Google and Sean Parker of Facebook etc. Read more

Andrew Hill

Britain’s Independent Commission on Banking may have started the practical process of ring-fencing banks against disaster. But the commission has no mandate to expose the truth of what went wrong in the financial crisis (including, it has to be said, the complicity of ordinary borrowers) let alone heal the trauma it caused.

Brad Fried, former chief executive of Investec, thinks that if an honest, open analysis of the causes of the crisis is not carried out, there is a risk that the UK, and the financial world, will repeat the same mistakes. Read more

John Gapper

Bernie Madoff’s interview with the FT from his North Carolina prison is a gripping read. As an aficionado of rogue traders and financial fraudsters, I am interested in why they turn the corner (as they usually do) from legitimate activity to crime. Read more

Andrew Hill

The acquisition of a minority stake in Liverpool football club by US basketball star LeBron James looks high on (self-)publicity and low on detail to me. Here’s the FT:

James’s LRMR Marketing & Branding group will take a “minority interest” in the club as part of a sponsorship deal agreed with Fenway Sports Management, a subsidiary of FSG [Liverpool's owner]. Financial terms were not disclosed.

This is a long way from a deal to use some of the Miami Heat star’s millions to build a new stadium for the UK club, or apply his business acumen to ensuring its survival. Read more

I once hitched a ride on a Gulfstream jet (purely for research purposes, obviously) and enjoyed the experience of being flown in a leather-trimmed cabin at nearly 50,000ft, escaping the turbulence buffeting the commercial aircraft far below. It felt as if I had joined the elite group that lives by different rules to ordinary folk.

Andrew Hill

The financial crisis revealed that management and supervision of banks were more than just a numbers game, so it’s distressing to see the European Commission edging towards a limit on the number of directorships bank directors can hold.

I’m all in favour of close monitoring – by the board – of whether board members are taking on too much. The job of bank director is too important to entrust to individuals who are already shouldering a big burden elsewhere. But the best way to ensure directors can devote quality time to the job is for the board nominations committee to be absolutely explicit about the amount of work involved. A clue: at large financial institutions, it’s a lot. Read more