Bits & Pieces

Clash of the titans

The weakness of the US based car manufacturers was displayed when Toyota overtook GM the world's top car seller earlier this year. GM has not been giving up and noted higher sales attributed to its strong presence in Latin America and Asia. Meanwhile, it seems that customers in North America seem to associate Toyota with high quality and fuel efficiency (and rightly so), making up for the weaker sales on its domestic market. Toyota is expected to beat GM in annual sales for 2007. GM has to either take away Toyota's competitive advantages (superior quality etc.), or refocus their own core competencies (more on this story: http://online.wsj.com/article/SB118491895284472882.html?mod=home_whats_news_us ).

Dow 14000

Yesterday, DJIA broke yet another thousand of points, springing doubts that it is just too high...

The importance of expectations

... and promptly fell 150 points today, as blue chips were releasing disappointing Q2 earnings data. Google's shares went down 5.2% despite quarterly profit grow of 28%, Microsoft also fell despite growing profit... just shows once again, that the markets expectations are the most important (See: http://online.wsj.com/article/SB118493115406772925.html?mod=home_whats_news_us ).

Encore

Last week an interesting news piece hit the news, but did not make a significant impact. The story was about Michael Dell returning as a CEO for Dell Inc. The company, his “child” which grew to be one of the most successful computer hardware sellers in the USA, if not in the world is struggling now. Dell’s vision and skills are supposed to be the answer.

In my opinion, he might just succeed, but I do not find the question “will he make it or not?” the most interesting aspect of the story. For me it is about another founder coming back to the business he/she created and trying to make a turnaround.

Steve Jobs of Apple, Charles Schwab of Charles Schwab Corp. are just two of the examples of how a founder can make a difference when coming back. Actually, Jobs practically save the company, revitalized it and allowed to achieve new heights. After Bill Gates stepped of at Microsoft, what followed was a turbulent time for the software giant, with greater competition on the account of Linux and tons of anti-monopolistic law suits. This resulted in a drop in stock price after 2000 (See: http://mwprices.ft.com/custom/ft2-com/html-quotechartnews.asp?symb=msft&vsc_appId=ts&ftsite=FTCOM&searchtype=equity&searchOption=equity ), which in turn resulted in Mr. Gates running Microsoft actively again.

Can it be a start of a nation-wide trend? The Wall Street Journal informs there have been 65 such “encores” in USA biggest 1500 companies in the last dozen of years (More on this story: http://online.wsj.com/article/SB117063556472497775.html ). Of course, not every such return is a stunning success, but most of the time you only hear about those that are.

I feel there might be something to it – the rules: “no one knows this company better than the founder”, and “if you want to have something done right, do it yourself” could very well apply…