Archive for the business Category

Speak for England, Margaret!

Posted in Banking, business, Politics with tags , , , on March 12, 2015 by Tom Leatherbarrow

Public Accounts Committee chair Margaret HodgeMargaret Hodge has been accused of being rude. She was. Margaret Hodge has been accused of being bullying. Possibly. Margaret Hodge has been accused of losing her rag. Definitely, and I envy her.

In an age of carefully choreographed media appearances, this week’s grilling of HSBC bosses at the Public Accounts Committee translated into a tour-de-force performance by its chair, the Labour MP for Dagenham.

If you haven’t seen Rona Fairhead, chair of the audit committee at HSBC, squirm when asked why she hadn’t quite grasped the fact that the bank’s Swiss business might, just might, possibly, potentially, be used for tax evasion, you can watch it here.

As Simon Jenkins comments in today’s Guardian, even a child knows that Switzerland is a tax haven. Apparently this little fact had escaped Rona.

Why do I envy Margaret Hodge? Because I recently closed down two HSBC accounts. I’d had enough of the money laundering, manipulation of LIBOR, playing around in the North American Mezzanine Credit Default Swap market, bonuses – I could go on but you get the point.

I marched into my local branch in Bromsgrove intent on giving the stuffed shirt who runs the place a piece of my mind when he, surely, would  ask me why I was deserting the sinking ship?

Only he didn’t ask. He directed me to a chair and then went off to check whether I had any money in either of the accounts or whether my salary was paid into them. I know this because I got out of my chair and looked over his shoulder.

When he found out that my salary was paid into another bank, he didn’t bother asking. He just turned on his heels leaving me with a colleague to cut up my cards.

So, I never got my Margaret Hodge moment and to add insult to injury a week later I got an automatically generated postcard from Head Office which said “It’s sad to say goodbye”.

No it wasn’t and well done Margaret.

New Troubleshooter is a welcome antidote to The Apprentice

Posted in business on April 11, 2014 by Tom Leatherbarrow

New Troubleshooter

At last a watchable programme about business.

Last night’s New Troubleshooter with Lord Digby Jones shooting from the hip was the best bit of business TV since … umm … well the last Troubleshooter series in the mid-1980s probably!

Now admittedly the standard isn’t high. Leader of the pack in recent years has been The Apprentice which portrays business as some sort of primeval, dog eat dog, survival of the fittest examination, involving haring round London in Black Cabs and performing idiotic tasks at Waterloo Station.

If these people are, to use the late David Halberstam’s phrase coined for the whizz-kids of the Kennedy Administration, the ‘Best and the Brightest’, then we really are in trouble.

Instead, last night, we had talk of balance sheets, cash statements and working capital. Sounds boring? Well actually, it was quite compelling.

When His Lordship asked the young Finance Controller for the cash flow implications of increasing the stock levels in the business and the poor chap had to admit that he didn’t have a clue, my wife shifted uncomfortably in her seat. The attempts at convincing the MD of the need for some demand forecasting had me rolling my eyes.

I’m old enough to remember the original Troubleshooter with the late Sir John Harvey Jones, former CEO of ICI. He too proved that business can make good television.

I vividly remember him walking into the stockroom of a small brewery which was jammed to the rafters with bottles of beer.

“What’s going on?” he asked. The MD looked to the floor. “We’ve not been able to sell it at current prices,” he admitted.

Sir John turned to him and said: “Sell it for whatever you can get. You need to turn this lot into cash. When I next come in here I want to see this place empty.” That’s where I first learned that lack of cash can pull a business under just as quickly as lack of sales.

Last night wasn’t perfect. I’d liked to have found out whether the company did ever produce a forecast and the results of their intellectual property application in regard to their new branding.

But, it was a much-needed start. Let’s hope the BBC sees fit to commission a second series

NSA leaks could put a slow burn under Silicon Valley business plans

Posted in business, Politics with tags , , , on July 15, 2013 by Tom Leatherbarrow

facebook_google_apple_logosYou could be excused for struggling to keep up with NSA leaks story which has been running for the past month or so.

If, like me, you are only now catching up with this, here is the story so far in a very abridged form. Edward Snowden the former US National Security Agency operative has revealed to the world that the NSA has been collecting, in bulk, meta data from search providers such as Google and Yahoo and also Facebook, Hotmail and anything else they can get their hands on, from Americans and non-Americans for years.

We also know, courtesy of the Guardian, that Skype has been compromised as has Outlook, whose encryption was unlocked even before official launch. The scale of the operation is staggering and is global – the French and Germans in particular are furious.

How have they got away with this? That is a good question, particularly in light of the Fourth Amendment to the Constitution which asserts the rights of people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizure.

Whilst the Founding Fathers may not have had the internet as a primary focus of their concerns for individual liberty it is clear that, in the modern world, search and seizure of information has as much to do with meta data as it does with paper.

The diplomatic implications are enormous, as are the potential implications for the big technology companies like Microsoft and Google who have been handing over the information (although they claim it has been under duress).

Web users are fickle and can quickly switch their allegiances to new social media or search providers with the click of a button. In fact, we might already have a clue to what the ‘Silent Majority’ of web users think of the ‘co-operation’ that has been offered to the NSA.

Zero tracking site DuckDuckGo for example, which pledges not to track or store data about its users went from serving 1.7 million searches per day at the start of June to three million within a fortnight.

The nightmare for the big players, Google in particular, is that the revelations accelerate the fragmentation of search which is already occurring in the States. The April 2013 ComScore results suggest Google lost 0.6% market share during the previous year to its rivals, which may not sound like a lot, but does demonstrate a clear trend and could potentially be worth billions in lost revenue.

It is too early to say what long-term effect these leaks will have on web users but, if the future is zero tracking, there are a lot of technology companies out there that will have to radically rethink their business plans.

Tumblr: Yahoo paid how much?

Posted in business with tags , on May 30, 2013 by Tom Leatherbarrow

yahoo-tumblr_2565560bI’ve had a little bit of time this morning to sit down and actually analyse the Yahoo deal for Tumblr which was announced last week.

I warn you, if you are expecting enlightenment on whether Tumblr can re-energise the Yahoo brand you need to go elsewhere. I haven’t a clue.

Equally, if you want my pearls of wisdom on the Tumblr demographic and whether it can deliver a younger generation to an ageing Yahoo customer base – you need to move along.

Same with online advertising and whether Tumblr will lose its followers if Yahoo tries to bombard them with ad’s. Please ask someone else, preferably someone from the WPR digital team.

However, I am qualified to examine the financials and they are eye-watering.  For a paltry $13 million revenue (that’s revenue not profit) Yahoo have paid $1.1 billion.  That is a multiple of 84 times revenue!

The move has been described as a “bold bet” by Yahoo Chief Executive Marissa Mayer.  Well yes that is one way of describing it, another would be lunacy.

Talk about betting the farm, Marissa has bet the tractor, the animals and re-mortgaged her parents’ home along with it.

What has been clear from the Tech’ Boom onwards, of which I was a part (where are you now, is that these companies are incredibly difficult to put a price on. Buyers are buying potential which, all too often, fails to materialise.

Martin Sorrell describes the digital age as anarchy. He’s right and this deal looks like a desperate act to try and bring order to an anarchic world, which ultimately will fail.

PS: I have spoken to those in the know on our digital team and they tell me that there is a good case for saying that Tumblr has had its day (already)! One fears that this isn’t going to end well for Marissa.

Oil price fixing: the real story is the impact on business

Posted in business with tags , , , , on May 17, 2013 by Tom Leatherbarrow

Price at the pump

The news that both Shell and BP were raided earlier this week in a price fixing probe has been greeted with hysterical headlines about the cost to consumers. The Daily Mirror screaming “They’re bleeding us dry” probably being the best example from yesterday’s front pages.

However, the ‘price at the pump’ is something of a distraction in this case. Yes, motorists have had their pockets picked, but I doubt that price fixing has had a dramatic impact on consumer behaviour.

Ten years ago I was doing 30,000 miles a year at 80p a litre, but my behaviour has not changed now that the price has risen to £1.40 a litre. I’m still doing the same sort of mileage.

All of this could lead the oil companies to argue, if any case comes to court, that this is a victimless crime. They’d be wrong.

The real issue here is potentially the impact on business. Let’s take the road haulage industry for example. Typically, the industry operates on very slim margins, in fact I remember one former client of mine existing on an operating margin of circa 2-2.5%.

That leaves no room for error let alone coping with the potential effects of price fixing. What’s more, all too often at least a portion of any increase in fuel prices cannot be passed onto customers – it just has to be absorbed.

And that’s just one example. What about courier companies, service industries with large car fleets and even your average white van man. The damage to business if this is proven is incalculable.

Of course this absorbing of cost increases by business has a knock on effect on wages and investment. I’ve seen figures this week which suggest that new product development is at historic lows in the UK. Real incomes for employees have not risen in ten years.

I was genuinely shocked at the rigging of LIBOR in London, the benchmark interest rate from which all other interest rates, globally, are taken. I don’t know whether I’m just becoming punch drunk from all of this but the news of the oil price fixing didn’t hit me in the same way.

The truth of the matter is, the pendulum has to be swung back towards greater regulation which might help “real businesses that actually make stuff” as one former Chief Executive client of mine told me a while ago.

The best way to start is for the Serious Fraud Office to prosecute some people.

You can’t prove anything with statistics!

Posted in business with tags , , on March 15, 2013 by Tom Leatherbarrow

manufacturingThe Office for National Statistics manufacturing figures released earlier this week make for dire reading, but I wonder whether there are others in the UK’s manufacturing base who are as confused as I am.

I am not for one moment saying it is easy out there, but the 1.5 per cent drop in output paints a picture of doom and gloom above and beyond what I am seeing and hearing.

Traditionally, with a drop of that magnitude the smaller players are the ones to suffer first.  But whenever I have been to visit smaller engineering subcontractors in recent months the usual response to my question about business conditions has been “busier than ever” or “flat out”.

Bigger manufacturers are going equally as well and in conversation a senior manager at one last week it was clear that frustration with the statistical acronyms, be it ONS, EEF or CBI is close to boiling over.

In fact, he made a very interesting point, namely that his sales performance used to closely track the Purchasing Manager’s Index (PMI), but that in recent years there has been a noticeable divergence.  In other words, as the PMI has gone south his sales performance has been remarkably robust.

Why is this?  I’m no statistician, but I do wonder whether the official statistics are at the same time too generic and too heavily weighted towards manufacturers supplying under-performing sectors, like construction, and insufficiently weighted towards high growth sectors like aerospace.

Perhaps, in the same way that champagne has been dropped from the Retail Price Index, one or two of the more glass half-empty purchasing managers need to be shunted off into retirement.

So the banks won’t lend, is it time to nationalise?

Posted in Banking, business with tags , , , on March 5, 2013 by Tom Leatherbarrow

Bank lendingYesterday’s figures from the Bank of England about UK bank lending to business are shocking.

In the final quarter of 2012, despite a new government scheme, called the Funding for Lending Scheme which has given them £14 billion to encourage loans, our banks have actually managed to lend less than before.

In other words, the scheme had the opposite effect to what was intended and British business remains starved of investment cash.

Chief culprits are, incredibly, the state-owned banks, namely RBS and Lloyds HBOS.  Lloyds, which is 40%-owned by the taxpayer, cut back its lending by more than £3bn during the last quarter of 2012.  RBS reduced lending by £1.6bn.

Where has the money gone?  To rebuild bank balance sheets decimated over four years ago at the height of the financial crisis is the answer.

We have now had the sight of two successive Chancellors of the Exchequer (Darling and Osborne) and a Business Secretary (Cable) imploring our banks to lend to business.  All appeals fall on deaf ears.

What is the answer?  As Lord Lawson of Blaby, former Conservative Chancellor of the Exchequer, said recently in an article in the FT, the way forward would appear to be to turn RBS into a national business bank of the type that has been running in Germany for years.

Should we be worried about bankers voting with their feet and going abroad chasing their bonuses which would be lost with nationalisation?  Not according to Lord Lawson.  “These are not particularly impressive individuals,” he said of young bankers in the City.  ”They’re all of them easily replaced, particularly in today’s labour market.”

Amen to that!