What's wrong if Infy bosses take huge bonuses?
Hangama kyon hain barpa;
thodi si jo pilee hain;
daka to nahi dala;
chori to nahi ki hain!!...
There has been a huge hue and cry of late over the top management of Infosys taking big bonuses home during the last fiscal. The critics see it as some kind of ‘capitalistic’ evil act at a time when the company is cutting workforce and freezing salaries on the back of the economic slowdown.
Sometimes I feel a larger chunk of educated people in this country have gathered a scornful feeling about Infy and its top brass over the years. The reasons for this can be myriad like just being jealous of how ‘stupid looking scholarly’ CEOs of the IT bigwigs could build such a big fortune without creating any legal hustles as created by other big industrialists or that feeling of ‘sour grapes’ among the graduates who somehow missed the train to riches that passed through the Silicon Valley. There are also a few skeptics who have a strong doubt over the financial health of these companies. The last feeling can be attributed to the ‘once bitten and twice shy’ human tendency post Satyam scam.
Looking from a typical economic perspective, there doesn’t seem to be a reason for critics to feel bad if the management is making big money after delivering what they were supposed to. The company is still profitable and has enviable liquidity. It has reported good numbers in last fiscal despite tough times.
So what's the matter if the management reaps benefits? It is way better compared to the top execs of GM and troubled financial companies in the West who continued to get good bonuses despite poor performance.
Talking about reduction in workforce, it is ok if employees leave the company whenever they feel like but it's not ok if the company chops headcount if environment is turbulent; isn't this hypocritical? Companies run to make profit and in that process they may provide or take away employment, what's the big deal? Moreover, just look at the tech and finance companies in the West, which have so far chopped millions of employees. In comparison, Indian IT biggies have still maintained their course.
Labels: Corporations
Aggregate revenue of top 4 US companies exceeds India’s GDP!
Some 45 years ago, my father learnt from his professor of economics that annual revenue of top four American companies together was more than what whole of India could produce. So many decades later it is interesting to check whether the intense growth of Indian economy in recent years has changed the history.
The latest list of top 500 American companies published by Fortune magazine reveals that had my father’s professor taught me the subject, he would have told me the same thing!
According to the list, the top four American companies based on their 2008 revenues are Exxon Mobil ($ 442.85 billion in revenue), Wal-Mart ($ 405.6 billion), Chevron ($ 263.16), and Conocophillips ($230.76 billion). These together clocked $ 1.34 trillion in revenues during 2008.
International Monitory Fund (IMF) has estimated India’s GDP at the current market prices to be $ 1.2 trillion for 2009. The gap between the two number though appears small has no hope to disappear even the next year since the country’s GDP is expected to be $ 1.22 trillion by then. This would however not hold true if the American companies see a sharp decline in business due to global economic woes and/ or India resumes its near double-digit growth.
It seems to be a rather long march for the biggest democracy towards economic prosperity!
Labels: Corporations
Hello iPhone, goodbye iPod!!
On 29th June, it appeared that whole of the geeks in the US had just one great mission: to grab the new toy on offer from Steve uncle! All the Apple retail stores across the nation saw long queues of tech enthusiasts to touch, feel and perhaps buy iPhone, the latest offering in the mobile communications space from the legendary Silicon Valley company.
The launch of iPhone is a major milestone in Apple’s corporate journey. It demonstrates the agility of its think tanks to sense the technological shift much before it wipes out profitability of a technology driven company (for instance digital cameras cannibalizing market of not only the analog cameras but also the camera rolls) or any other non-technology business (Indian postal department facing stiff competition from e-mails and telecommunication; as a matter of fact, I’ve not written and posted a single letter in past seven years!).
Take a close look at the evolution of mobile technology and you will realize that it was quiet evident that iPod was going to be a dead technology sooner than later given the voracious appetite of latest mobile handsets for music and video. There is no logic in keeping two devices --- one for music (iPod) and other for communication (mobile handsets) when you can get just one gadget having both the capabilities.
With breakthrough mobile handsets from Sony and Nokia providing all the virtual stuff under one roof (games, music, video, camera, wireless communication, internet etc), days of iPod like gizmos were numbered. It is a great sense of maturity on Apple’s count to accept this stark reality. In early 2005, they announced plans to come out with a mobile phone. This seemed to be like late entry in already fiercely competitive mobile handset space. And, personally, I was wondering what kind of niche Apple can create in such a dynamic product space where one finds a few new handsets after every six months.
But, Apple didn’t disappoint. It is always the message Apple gives the observers, which says there still can be a lot of room to fit an altogether new approach to existing solutions. Thus, Apple didn’t invent technology of mobile communication. But, it did introduce a new ergonomics to the handsets. It has perhaps changed the way people use and handle the device --- swivel and shuffle, portrait to landscape and back etc.
This is the third time that Apple has taken advantage of something which was missing from the technological space for no valid reason. First, it was the iMac candy colour PCs, which made technology look beautiful and cuddly. Then, it was iPod, the digital walkman (Sony must be repenting for missing on this great opportunity). And now the iPhone, doing something that any other latest handset can do but with a brand new perspective.
One thing is sure, Apple has forced its new line of competition (the handset makers of the world) to give a radical thought to their designing strategies for moths to come!
Labels: Corporations
Google goes black to keep the earth green
What can a website do to create awareness about energy conservation and global warming? Nothing much you would say apart from hosting some anti global warming slogans and carrying interviews of experts on green revolution. Well, in that case here is a surprise for you. Google, the most used search engine on the internet, is going all black to keep the mother earth green! It has launched an all-black version of its search engine at
www.blackle.com. Blackle stands for Black Google. It is the same old search engine familiar to the netizens around the world but with a black background. Google made this change as a response to a blog-posting titled ‘Black Google Would Save 750 Megawatt-hours a Year’.
This appears to be the first instance when a popular website has taken steps towards energy conservation, which has largely been a forte of global energy utilities. Earlier in January, Mark Ontkush, owner of the blog ecoIron (
http://ecoiron.blogspot.com), had expressed a wish for black Google to save energy per computer per view. Mark who identifies himself as a 39 year old green computing evangelist from Boston, USA had then argued that an all white web page – the one like Google has -- needs about 74 watts of power for display, 25% more than what an all black page uses. Google gets over 200 million queries every day. This translates into 5,50,000 hours of daily display assuming an average display time of 10 seconds. Since an all black web page needs 15 watts less, this would result into savings of 3000 megawatt-hours annually. Mark had further quantified this savings to be over $ 75,000 annually at 10 cents a kilowatt-hour in case of cathode ray tube (CRT) monitors.
“We believe that there is a value in the concept because even if the energy savings are small, they all add up. Secondly we feel that seeing Blackle every time we load our web browser reminds us that we need to keep taking small steps to save energy”, a note on Google’s website said. It also encourages users to set Blackle as a home page for the browser. “Remember, every bit counts!” it says.
The thought posted by Mark on his blog soon became popular in the Silicon Valley. While some supported the thought, others were sceptical about the authenticity of the calculations. It was argued that screens based on liquid crystal display (LCD) technology consumed the same power or in some cases more while displaying an all black screen. Since more than 75% of the screens in the world are LCDs, an all black display would hardly save energy. In a reply posted on his website, Mark says,” My point is that there is a colour that, after taking into account, all types of monitors (LCD, Plasma, organic LEDs) is the most efficient for large sites”.
It needs to be seen whether this trend also catches up with other popular search engines and websites including msn, Yahoo, ask and altavista, which mainly use a white display.
Labels: Corporations
Vodafone bags the Hutch Puppy
Vodafone has apparently struck a deal with Hutchison Telecom International (HTIL) to buy its 67% stake in its Indian operations for over USD 19 billion. This values the total Indian operations of the Hong Kong based telecom major at USD 826 per subscriber or INR 37,000. Now, that's a steeper price to pay looking at the valuation of INR 34,000 of Bharti Airtel, the largest mobile operator in India. Further, IDEA Cellular, which is tapping the primary markets to raise INR 1,250 crore values itself at approximately INR 19,000 per subscriber.
Amazing price tag for Hutch, isn't it? This perhaps shows Vodafone's desperation to enter the fastest growing mobile communication market in the world. The Indian market is expanding by 5-6 million users every month! And, despite this, market penetration is over 14%!! This is estimated to touch 28% by the end of this decade. That's mind numbing pace!! Perhaps this answers the obvious question of why such a steep pricing. But, there is another obvious question left unaddressed and unasked by the popular media: Why Hutch wants to move out of such a seemingly lucrative market after having over 16% stake?
Interestingly, nobody is in a mood to either ask or answer this question. Well, there is this vibe from down under the market currents. Hutch knows for sure that it has to make big investments in 3G business to remain competent. It has already spent over USD 20 billion in such projects. So, it needs more money to keep growing. But, why to sell the entire stake? It can very well offload some of its stake to the Indian public. That way, it can have its cake and eat it too. Now, comes the unscratched part of the story. It is rumoured that over a period of time, HTIL has routed investments in its Indian operations from various sources, some of which, it may not be comfortable to disclose to the Indian regulators. So, only way out for Hutch was to move out of India!
Well, that sets an inorganic growth tract for Vodafone in India. With the entry of world's largest mobile service provider in the country, the Indian telecom industry is up for a major excitement in the foreseeable future.
Labels: Corporations
2006 List of Fortune Top American companies
The Year of 2005 when the big oil displaced the retail giantFinally, it happened. Hot oil market in 2005 helped Exxon Mobil to
snatch the top position in the list of Fortune 500 American companies
from the retailing behemoth Wal-Mart Stores. Exxon mopped up revenues
of USD 339.94 billion, slightly higher than USD 315.64 billion earned
by Wal-Mart. But, the growth in revenues clocked by the former (25.5%)
was much sharper than that reported by the latter (9.6%).
Exxon staged an impressive performance on the profits front as well. It
became the largest profit maker US company (USD 36.13 billion) with 42.6
per cent rise in bottomline. This was way higher than Wal-Mart's profit
of USD 11.23 billion growing at a pace of 9.4 per cent.
General Motors was the distant third in the revenues list with sales of
USD 192.6 billion closely followed by Chevron (USD 189.48 billion). While
a 28.1 per cent jump in revenues helped Chevron to move two places up,
GM could retain its position despite a small decline of 0.5 per cent
in revenues.
Overall, the top 500 American companies grossed USD 9.1 trillion in 2005,
a rise of 10.2%. This formed more than 70% of the American GDP. Profits
rose by 18.8% to USD 610 billion. The top four industries clocking the
maximum profits were commercial banking (USD 91.7 billion), petroleum
refining (USD 74.5 billion), insurance (USD 47.3 billion) and pharma
(USD 42.5 billion).
Labels: Corporations
General Motors, on the brink of bankruptcy?
The front cover of mid-February issue of
FORTUNE is rather scary though
not too unexpected. The magazine, which is famous for its annual list of
top 500 global companies, has raised questions over viability of
General
Motors, the world's biggest car manufacturer. It may have to resort to
chapter 11 sooner than expected, the magazine says.
The woes of GM are not unheard of in Detroit. The company is saddled with
the burden of funding employee retirement schemes of some 11 lakh odd
employees. This costs GM over USD 1,300 per vehicle sold in the US. To
add to the trouble, the Japanese car makers are gradually eating the
big daddy's pie in the home market. GM's share in the US auto market
has declined from about 45 per cent in 1980 to less than 30 per cent in
2005. The company lost USD 8.6 billion last year.
GM is also struggling to reinstate the brand image in the mind of American
consumer. It seems that GM's cars have lost touch with time. The company
has found difficulty in launching new models successfully in recent
time. Moreover, though the company claims that it now manufactures more
reliable cars, the 'once bitten twice shy' American consumers are not
interested in taking chances. They prefer the vehicles from the Japanese
car makers.
The reflection of all the bad news can be seen in the performance of the
GM stock on the bourses. It is currently trading at a 25-year low of
about USD 23. The slide in the value of the stock since it touched an
all-time high of USD 93.75 in April'99 is tiring. The credit rating
agencies have already junked the bonds of the company.
The executives at GM, it seems, are trying all that they can to save
the 98 year-old company from bankruptcy. The most preferred tool in such
cases is cost-cutting. The company may have to take seriously the term
'equality of sacrifices' coined by one of the investors. Under this,
the management is suggested to cut upon not only wages and other employee
benefits but also dividends paid to the investors. As per the latest news,
the management is planning to take up a 50 per cent cut in dividends.
The company has also initiated consolidation of its business activities
in USA. It plans to cut over 30,000 jobs and shut down multiple plants
in the country by 2010.
It is offering attractive pricing schemes on its cars. But a stark
possibility of bankruptcy is worrying consumers. In such a case, the
company may falter to carry out maintenance contracts.
A bankruptcy at GM is not a music to Ford's ears. The major US rival of
GM may have to face a spate of discounts and low prices offered by GM
dealers to clear the inventory if GM files for chapter 11.
Perhaps, GM may not have to face a bankruptcy. It is still the
biggest auto company in the world and holds majority stake in the US
market. Moreover, the US government, at an opportune moment, may bail
out the grand daddy just like the Italian government has done for Fiat
in the past. Only time can tell that.
Labels: Corporations
