Monthly Archives: November 2011

Andrew Hill

In its new report, the High Pay Commission makes much of the risk that Britain will slide back to “Victorian levels of pay inequality” if runaway executive pay awards are not somehow reined in.

The parallel with the Victorian era is a resonant one. Even some of the characters in the modern-day saga are Dickensian. The avuncular Vince Cable, Britain’s business secretary and supporter of the thrust of the independent commission’s proposals, is half-Micawber, half-Cheeryble. John Varley, former chief executive of Barclays, seems a stiff-collared braces-wearing throwback to an earlier era in most respects – except one: the commission points out that top pay at his old bank is now 75 times that of the average worker, compared with a ratio of only 14.5 times in 1979.  Read more

Nine hundred people talking animatedly online about brown clinker – a cement ingredient – doesn’t sound much of a vision. But it may be exactly what computer visionaries had in mind when they first envisaged computerised collaboration between workers midway through the last century.

John Gapper

The more details emerge of the shortfall in customer funds at MF Global, the financial broker formerly headed by Jon Corzine, when it collapsed three weeks ago, the more disturbing it appears.

For a time, it seemed plausible that the funds had simply been mislaid in accounts that could not be immediately accessed when MF Global went into Chapter 11 bankruptcy. But the likelihood that the money was improperly used – and lost – has increased. Read more

Michael Bloomberg, New York City’s mayor, made himself unpopular with his decision to raid Zuccotti Park in the early hours of Tuesday and evict 200 campers from the Occupy Wall Street protest, but he was right. So is the City of London Corporation in attempting to shift the tents from outside St Paul’s Cathedral.

John Gapper

Warren Buffett’s foray into IBM, acquiring a 5.5 per cent stake in the company, seems to defy his longstanding antipathy to investing in technology companies. But it depends on what the meaning of “technology company” is.

Mr Buffett’s main objection to technology has always been its unpredictability, as he explained in this discussion with Bill Gates in 1998, which was published by Fortune magazine:

“I look for businesses in which I think I can predict what they’re going to look like in 10 or 15 or 20 years. That means businesses that will look more or less as they do today, except that they’ll be larger and doing more business internationally.”

“So I focus on an absence of change. When I look at the internet, for example, I try and figure out how an industry or a company can be hurt or changed by it, and then I avoid it. That doesn’t mean I don’t think there’s a lot of money to be made from that change, I just don’t think I’m the one to make a lot of money out of it.”

 Read more

John Gapper

The Cinderella story of the unexpectedly successful Citigroup auction of EMI – with the business being sold in two halves to Vivendi’s Universal and Sony – is the recorded music division.

The FT reports that Universal is paying about $1.9bn – more than the $1.7bn-$1.8bn that Citigroup, which took over the business from Guy Hands’ Terra Firma, initially hoped to get. That appears to signal some life in recorded music, after all.

The conventional wisdom of recent years has been that, while the music publishing companies that hold the back catalogue rights for well-known music, still had some value, recorded music values were slipping due to mass piracy and the digital revolution. Read more

The goings-on at Olympus were baffling three weeks ago. Michael Woodford, the Japanese company’s British president, was fired and then disclosed details of some very odd deals. Something was badly awry but it was hard to fathom why Olympus had wasted $1.4bn on three tiny acquisitions and a ludicrously inflated advisory fee.

Colourful opportunists are characters from the M&A world’s myth of combat. Here, acquisitions – and not only the hostile ones – follow weeks of hand-to-hand skirmishing, first between bullish chief executives and their more cautious boards, then between the company and its investors, and finally between the merging groups. This tale and its romantic corollary, the myth of true love – clashing armies, or blushing brides – are the stories on which the media thrive.