Monthly Archives: June 2011

Andrew Hill

My favourite bon mot from Richard Rumelt, the UCLA strategy expert whose interview fuelled my column this week, was his comment that in any boardroom discussion of strategic options, acquisitions should be “guilty until proven innocent”.

Prof Rumelt’s new book Good Strategy/Bad Strategy makes clear he is no fan of M&A. “The problem with engineering growth by acquisition,” he writes, “is that when you buy a company, especially a public company, you usually pay too much.” Read more

John Gapper

J.C. Penney, the department store chain, has pulled a fast one by nabbing Ron Johnson, head of Apple’s retail stores as its next chief executive.

The runaway success of Apple’s stores, despite early predictions that they would go the way of other capital-intensive efforts by product manufacturers to reach consumers, have prompted many imitations but none have worked as well. Read more

Few terms of corporate art are more abused than “strategy” and its cousins. Put “strategic” ahead of simple decisions (strategic acquisition, strategic initiative, strategic hiring) and the people carrying them out can feel more important, while those advising can charge a higher fee.

John Gapper

Further to my column on the bad smell emanating from Groupon’s S-1 filing for an initial public offering, more details are emerging of how Groupon has been buying growth and the past business ventures of Eric Lefkofsky, its chairman.

Fortune has an article on how Mr Lefkofsky and Brad Keywell, his business partner, have launched other businesses that have grown rapidly and then run into trouble – and have taken out money through share offerings.

Meanwhile, Sarah Lacy at TechCrunch reports on the turmoil in Groupon’s international businesses, especially in China. As Sucharita Mulpuru of Forrester Research points out, much of Groupon’s growth comes from international acquisitions.

One thing this reminds me of, however,  is the value of listings requirements and public market disclosure. In a world where late-stage technology investments are increasingly made through private markets such as SecondMarket and SharesPost, there is nothing like an IPO to bring awkward details into the open. Read more

Andrew Mason, the co-founder and chief executive of Groupon, is an amusing frontman. “Life is too short to be a boring company,” the 30-year-old declared in Groupon’s public filing for an initial public offering last week, and he lives up to that in his personal life, with pranks such as filming himself performing yoga in his underwear.

Andrew Hill

Fifa’s “council of wisdom” is shaping up to be one of the oddest advisory boards in the history of governance. Sepp Blatter, world football supremo, has sent invitations out to former player Johan Cruyff, ex-diplomat Henry Kissinger and opera-singer Plácido Domingo.

Blatter, re-elected as president of the world governing body last week, hopes this eclectic bunch – which he also called a “committee of solutions” in a frankly odd CNN interview on Tuesday – will help clear the pall of scandal hanging over FifaRead more

Andrew Hill

Andrew Witty, GlaxoSmithKline’s chief executive, won plenty of column inches and airtime on Monday with the UK drug company’s offer to supply developing countries with millions of doses of its vaccine against rotavirus gastroenteritis, at a 95 per cent discount to the western market price.

Your first reaction might well be: if $2.50 a shot still covers GSK’s costs, Mr Witty’s making quite a margin on the $50 he charges the developed world for the drug. Read more

John Gapper

I’ve never played “dogpile” but I think Peter Henning is right to argue that Goldman Sachs has become the target for every US prosecutor to pile on top of, in the hope of finding a civil or criminal charge.

In a column last month I wrote that I doubted whether anything in the report, or in the evidence given by Goldman executives to the committee, amounted to criminal misconduct. Matt Taibbi of Rolling Stone differs with me on this.

But my sympathy with Goldman is limited since I argued before its problems blew up so dramatically that a business model based on “managing” conflicts of interest rather than avoiding them made it vulnerable. Read more

John Gapper

Groupon, the online coupon business, has jumped on the internet bandwagon by filing for an initial public offering, and the figures it discloses in its S-1 filing are astonishing in various ways.

In short, Groupon is  growing like crazy in terms of number of users and offers, while losing money at an eye-watering rate. To make up for the latter, it has come up with an ingenious way of smartening up its figures.

The S-1 filing shows that Groupon had 83m subscribers at the end of March and its revenues rose from a total of $713m in 2010 to $645m in the first quarter of 2011 alone. Read more

John Gapper


Microsoft has just unveiled some details of its future Windows 8 operating system and, while good-looking, it shows signs of the traditional Microsoft compromises to keep faithful to past versions.

A video shown at the D9 conference on Wednesday shows the new “tiles” that are Microsoft’s way of making it easy for users on its planned generation of tablets to navigate their way around. It clearly hopes that Windows 8 will allow it to catch up with Apple’s iPad.

In the background, however, is the familiar Windows file manager architecture for navigating applications – you can see it switch between the two in the video. Microsoft is thus layering something new on top of something old. Read more

The only thing on which companies and investors seem able to agree about initial public offerings is not to trust investment banks.

Peter Thiel, a Facebook director and Silicon Valley venture capitalist, told the Financial Times this week that bankers had “screwed up” the IPO of LinkedIn by setting the price too low, only for the shares to rise 109 per cent on their first day of trading. At the same time, BlackRock, the institutional investor, complained of banks pricing IPOs too high in the UK to amass fees.