Monthly Archives: September 2011

John Gapper

The appointment of Meg Whitman today to replace Léo Apotheker at Hewlett-Packard is a resounding blow to Mr Apotheker. But it also reflects very badly on the hapless HP board.

I was very critical of Mr Apotheker’s abrupt change of course in August, arguing that he had “needlessly alienated investors by thrusting so much unpalatable information and future uncertainty on them at once. He should have taken things steadily rather than making a big bang.”

But what was HP’s board doing by appointing him less than a year ago, agreeing to his strategic shift, including a spin-off of its personal computer division, and then turning round and jettisoning him after the market reacted badly? Read more

According to the business textbooks, Reed Hastings is a visionary and innovator. But thousands of his customers, and many of his investors, think the chief executive of Netflix is an idiot.

Andrew Hill

When I worked in Milan in the mid-1990s, it was a standing joke that young Italians would not quit the family home: it was just too comfortable being cosseted by mamma and papà. Now this stereotype has solidified – young Italians feel unable to leave, even if they want to – and this could have serious implications for how the financial and economic crisis there plays out. Read more

Andrew Hill

Most companies aim to get bigger. But beyond a certain point, bigness becomes synonymous with badness. Think of Big Pharma, Big Auto, Big Oil.

Worse, if you are regularly described as one of the Big Four, Five or Six in any business sector, you are probably already in the sights of regulators and lawmakers.

This demonisation of corporate girth is nothing new. I can’t find a source for this image – which Marc Gunther uses to illustrate a blogpost about the growing power of US big business – but I’d say it dates from the first half of the last century, and there are plenty more where it comes from. Read more

The $2.3bn trading scandal at UBS – uncannily similar, it seems, to the €4.9bn hole uncovered by Société Générale in 2008 – makes me wonder whether corporate boards have fully appreciated the risks of relying on risk managers.

John Gapper

At first glance, the apology by Reed Hastings, chief executive of the US video service Netflix, for raising the base price of his video service by 60 per cent looks sincere and heartfelt – the kind of plain-speaking that is too rare in chief executives.

“I messed up. I owe everyone an explanation.”

So far, so good, but reading further into Mr Hastings’ missive, which follows a 15 per cent fall in Netflix shares last week as it said it expected to lose 1m subscribers as a result, it becomes clear that the apology does not mean he is backing down – in fact, he is going further. Read more

John Gapper

Given the recent history of UBS, it is fair to ask if Kweku Adoboli is a rogue trader or his employer is a rogue bank.

At one level, Mr Adoboli might appear to fit neatly into the stereotype of the rogue trader, a phenomenon that recurs so often that it is an endemic aspect of modern investment banking. He is young, fairly junior and works on a desk that combined proprietary position-taking with “flow trading” in customer orders.

The latter has in the past allowed rogue traders such as Nick Leeson of Barings and Jérôme Kerviel of Société Générale, to conceal losses while appearing to be doing what their employers wanted. Mr Adoboli has been arrested but not charged, let alone convicted, so he has the presumption of innocence. Read more

Andrew Hill

Ensuring energy security; fighting poverty; the future of the US dollar; the future of cities; why leaders turn a blind eye; and why they build bad strategies.

These are the contrasting themes of the six books battling to win this year’s Financial Times and Goldman Sachs Business Book of the Year Award – a shortlist that is low on “crisis”  books compared with prior years. The finalists are:

Poor Economics: A Radical Rethinking of the Way to Fight Global Poverty by Abhijit V. Banerjee and Esther Duflo (Perseus Books, Public Affairs, USA)

Exorbitant Privilege: The Rise and Fall of the Dollar by Barry Eichengreen (Oxford University Press, UK)

Triumph of the City: How Our Greatest Invention Makes Us Richer, Smarter, Greener, Healthier and Happier by Edward L. Glaeser (The Penguin Press, USA; Macmillan, UK)

Wilful Blindness: Why We Ignore the Obvious at Our Peril by Margaret Heffernan (Walker & Co, USA; Simon & Schuster, UK)

Good Strategy, Bad Strategy: The Difference and Why It Matters by Richard Rumelt (Crown Business, USA; Profile, UK)

The Quest: Energy, Security, and the Remaking of the Modern World by Daniel Yergin (The Penguin Press, USA; Allen Lane, UK)

 Read more