Filed under: Business, Human Resources | Tags: careerbuilder, cnn, good jobs, job
During this mornings news reviewing I found this funny little article on how to decipher if your job is really a keeper. With some world economies dumping as we speak, some of these issues could be interesting for you readers out there.
Check the CNN.com and Careerbuilder.com story and see if your new job is really the best option for you. Click the link below.
Six signs your new job is lousy
Filed under: Business, Economic Value Added, Management, Strategy | Tags: capital, corporate strategy, Economic Value Added, EVA, ROIC, stern stewart, value based management, WACC
The next couple of weeks I will bring you some articles on Value Based Management, and why this can help you plan your business even better. In this first edition I briefly explain what it’s all about, and in basics how to look at it.
Many managers spend time looking into sales, growth, and investor returns trying to benchmark the performance and valuate their companies. In doing this they look to increase performance on one or more of the mentioned factors to generate more returns to shareholders, or generate even higher incomes for the company. But what problems do these managers face in approaching corporate strategy this way?
Some of the popular measures include comparing the net income with the equity of the company, or comparing the net income the total amount of assets in the company. The problem in this method is that measuring net income relies on the way in which the company chose to do so. For example there are different ways of calculating costs of sold goods, calculating R&D expenditures or calculating the acquisition of a new company to name a couple. On top of this, these measurements do not take in account the ‘time factor’, which can give managers misleading results from which they will have to take decisions on future corporate strategy.
If we want to take a closer look on how well the company is performing, we will need a measurement that can give us a more precise idea about this issue. The answer to the question is looking into how the company is creating (or destroying) value, and/or adding value to its operations. This, among many names, is known as Economic Value Added, or EVA, as the consultants Stern & Stewart named it.
With EVA we have a measurement that tells us something about how well a given company is performing, and the measurement can be used to plan corporate strategy to create positive long-term results.
Doing this we need to look into some basic factors. The idea is comparing the invested capital with the returns on invested capital (ROIC) and the waged average cost of capital (WACC). To put it simple we want to make sure that we are getting more returns from our invested capital (ROIC), than we are paying for the capital (WACC). To make sure that the company’s operations give us a positive result, the ROIC also has to be superior to zero. This means that the optimal result would look like this:
This example would generate economic profit, as well as generate long-term value for the company and enhance its competitive edge. In an investor perspective, this would be a good investing, as this company is focusing on the generation of long-term value and not trying to short operations to make the balance sheet look even better.
This was a very short introduction on how to change your mindset into the Value Based one. In the next couple of weeks I will explain how to calculate these numbers, how to make forecasts and thereby optimizing business operations.
Filed under: Business | Tags: Google, hostile takeover, IPO, Microsoft, Yahoo
Today it became public that Yahoo! formally rejected the bid that software giant Microsoft announced on February 1st. According to Yahoo! the company says that the offer “substantially undervalues” the companies operations, but what does this mean?
Yahoo! stocks have been dropping to under $20 pr share during the last year, and the $31 pr share offer seemed reasonable thinking about Yahoo!’s market position. As a portal and email service, the company might have a good share of loyal visitors, but in the online marketing and search engine divisions they are way behind market leader Google. There is no signs, and not even a statement from the board of Yahoo! directors, stating that the company has a reasonable strategy in gaining market shares in these new and highly growing markets, even though they probably want to make us think so in rejecting the offer. In saying that Microsoft is undervaluing the Sunnyvale-based company, the very same board of directors might be overvaluing their own business.
It is possible that the negative response is a strategic attempt to gain massive PR, trying to force Microsoft into making an even higher offer, which would please Yahoo! shareholders. The problem is that Microsoft stocks have been dropping down since the offer was announced, and a higher offer is bound to make their stocks fall even more.
Now Microsoft can do the following. They can withdraw their original offer, which will probably send Yahoo! stocks down to or below it’s original level around $20 pr share. There has been several speculations on other interested buyers, or even strategic alliances. In the latter Google has been mentioned as a possible alliance, but it seems very unlikely that this would be granted during to the two companies positions in the online marketing business. The other option is that Microsoft tries a hostile takeover, going straight for the Yahoo! shareholders. And third and last, the company could simply raise their offer to please Yahoo!’s board of directors.
We can only wait and see what will happen in this case, but the future behavior of the companies will be interesting to follow. Obviously Microsoft wants a piece of the online marketing pie, but for what price? And how far are they willing to see their shares drop before the final offer really doesn’t give the company any increase in economic value?
Filed under: Business
In a decade of years we might be able to travel from Europe to Australia in less than 5 hours. That’s the plan of the company Reaction Engines on their new type of airplane.
According to CEO of Reaction Engines, Alan Bond, the big problem with the now retired Concorde flight, was that it wasn’t designed for flying at low speeds. This generated a shock-wave kind of reaction when the plane took of, and may have been the cause of the fatal accident that lead to the total suspension of the Concorde flights.
With their new project, A2, the company are looking into the solution of this problem. At low speeds the plane will be able to take off and leave the airports without engine problems, and as soon as the plane gets out to the sea, they will be able to increase the speed up to mach5, or 5 times the speed of sound.
The plane will have a 300 seat capacity, and instead of using regular fuel, the plane will be using nitrogen, that doesn’t pollute the environment with CO2.
Any which way we will probably not see this plane in the air the next 20 years, as the development is still in progress. The project is partly funded by the European Space Agency.
Read more about the plane and see more photos here
Filed under: Business, Economy | Tags: Google, hostile takeover, IPO, Microsoft, Yahoo
It’s not any news that the computer business is one of the fastest changing industries in the world. Companies get big fast because of ‘investor love’, and of course from time to time some way to positive analysis leading to insane IPO’s. These giving new companies a cash flow boost that many other industries can only dream of.
When Yahoo! started back in the days they had a dream start with a extremely good IPO making the young Stanford founders, rich guys. But Yahoo! delivered. The company grew fast and got a good portion of the search, email and page traffic. Yahoo! became a brand, and one of the first really established online brands. With recent Microsoft buying offer the question is if Yahoo! can really continue delivering, or if they will suffer from the common tendency where established companies start loosing their competitive edge, the competition gets more tough, and as a result the growth slows down in these companies. Maybe this already happened to Yahoo!. The company has not been delivering the expected results and the stock dropped more than 10% only some weeks ago. Maybe founder and current CEO Jerry Yang has not been able to keep up with the new trends, or maybe the competition has simply grown too strong for Yahoo! that currently has roughly 14.300 employees.
When the big social networking wave started rolling, Yahoo! tried to get on it. Their “360″ flopped massively and the company failed to get into this big growth market. Maybe the same flop is what Yahoo! is facing? I mean when did you hear “Do you Yahoo!?” the last time? I guess you more recently heard the phrase “Google it”.
So what is going to happen? Of this we can only guess so far, but one thing is certain. Google is a big an innovative player in both the search, and online marketing business, and there is no indications that this will change. With Google’s great dominance in both, Yahoo! is forced to look into new ways of re-launching their brand, and the question is if this race is already lost. Microsoft just announced their 0ffer for a possible hostile takeover, and it’s going to be very interesting to see if an acquisition can help boost both these companies. Buying Yahoo! will give Microsoft a better share in the online marketing, but who knows if this will just force Google to be even more innovative. New speculations include a possible Google/Yahoo! merger, but this deal is very unlikely to be approved because of these companies current positions in online marketing.
I guess the next couple of months will give us the answers to all these questions. In the meantime Yahoo! is analyzing the offer, while Microsoft is waiting, but let’s hope they don’t forget all about the innovative edge that once made these companies big.
