Showing posts with label CEO. Show all posts
Showing posts with label CEO. Show all posts

Wednesday, March 06, 2013

DOMESTIC AIRPORTS: R-ADAG

One year back, Reliance ADPL came out victorious on its new turf of airports development by winning the bid to develop 5 airports in Maharashtra. B&E meets Reliance’s top executives to get the mid term progress report by Swati Sharma

The company has also hired a team of experts from New York based consultants Louis Berger Group and Knight Frank that will be laying the future road map for the development of airports with the investment reaching beyond `5 billion already in line for the next three years. “Modern regional airports will boost tourism, stimulate the aviation industry and create business opportunities for us and we believe that they will catch up soon in times to come,” Ravi Radhakrishnan, Business Development Manager at RADPL tells B&E. RADPL is now bidding for the new international airports in Navi Mumbai, Pune, Noida and Goa with the projects pegged at `240 billion, apart from non-metro airports in Gujarat and Andhra Pradesh.

But there are a few critical challenges: some financial, and some because of the external environment. Currently, the returns on investment have not been high from the five airports owing to overall low traffic (of passengers; and consecutively, airlines) and as a result, other sources of revenue like food and beverages are also not very lucrative. The issue of demand, which RADPL seems to have analysed, still has some blank spots. Some are quite straightforward. For example, Baramati as a regional airport is targeting Mumbai and Pune clientele. However, Baramati is just a 2.5 hours ride from Pune, putting a substitute road travel option a big competitor to airlines operating Pune-Baramati flights, therefore ensuring that such airlines operate lesser flights.

Vidya Basarkod (CEO, RADPL) comments to B&E, “The challenges in development of smaller airports also include limited traffic and the high cost of mandatory infrastructure & security and limited sources of aeronautical & non-aeronautical revenue.” The government, though, has (or rather, had) attempted to be proactive. The government had granted waiver for landing and parking charges to aircrafts with less than 80 seats operated by domestic scheduled operators and helicopters of all types. The government apparently did this to ensure encouragement of smaller aircraft operations to regional airports. But strangely, there was no obvious connection of this made with regional airports, as the small aircraft operating airlines simply chose the metropolitan or ‘trunk’ routes over regional destinations. Now, AAI is demanding that this waiver policy be revoked, as it didn’t serve the original intent of motivating traffic to regional airports.


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri
and Arindam Chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles

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Monday, December 03, 2012

Indian animation industry

The Indian animation industry desperately needs some brand recall

The fact remains that the Indian animation industry has to grow out of the long shadow of Hollywood and to some extent Bollywood, and to carve its own identity, its own niche, populated with characters which have the same recall and relevance as Mickey Mouse. But sadly, it is in this department that Indian animation has yet to make a real breakthrough. Although Hanuman was a hit, it failed to create an icon, and with Hanuman Returns not doing so well along with outright disasters, like Ghatotkach: Master of Magic and Roadside Romeo, its back to the drawing board (literally) for Indian animation. Mr. Ronal D’mello, Managing Director and CEO of Maya Academy of Advanced Cinematics strikes a positive note, “India has a huge young population and the animation genre will catch up ultimately in all mediums of audio visual entertainment. The industry is quite buoyant in international content outsourcing for the right players and with the constant improvement of quality of animation by Indian animation studios with every passing production on the floor, it won’t be too ambitious to anticipate Indian studios producing entertainment for a global audience.”

Additionally, animation movies from Israel have shown, through their award winning efforts such as Waltz with Bashir and others, that it is possible to get global recognition with a limited budget. And with the forthcoming release of the costliest animation movie ever from India (with an estimated budget of Rs.60 crore), Sultan the Warrior, starring Rajnikanth in the lead role is set to hit the theatres in January, along with UTV’s Arjuna, India will surely be seen on the world animation map.
 

Source : IIPM Editorial, 2012.An Initiative of IIPM, Malay Chaudhuri

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Saturday, December 01, 2012

GOOGLE, YAHOO!: TALKS BREAK DOWN

Yahoo!'s only worthwhile option now seems to be AOL

And Steve Ballmer, CEO, Microsoft has added fuel to the fire by declining any more bid for acquiring Yahoo! which has taken Yahoo!’s stock price to a 52 week low at $11.25 on October 28 (trading at $11.87 on November 10).

The online ad industry is expected to grow manifold in times to come, which makes it all the more lucrative. So, the option available to Yahoo!; at least at this point is that, it should shortly be knocking at the doors of AOL. And if speculation is to be believed, Microsoft will wait for AOL-Yahoo! merger and then buy the merged entity altogether. That's a convenient anti-Google gang up. Besides, it would not catch the attention of the Justice department. Of course; Google may have a few points to ponder then.


Source : IIPM Editorial, 2012.

For More IIPM Info, Visit below mentioned IIPM articles.
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Thursday, August 30, 2012

How long will Yahoo! survive?

From misjudged partnerships to acquisitions of misfits, Yahoo! has done all to curdle its business model & jeopardise its future. Time is less & dollars are precious. Can Carol Bartz fight inevitability? by Steven P. Warner

Sixty-one year-old Carol Bartz, the CEO & President of Yahoo! Inc. is a Texas Tower. Hard to ignore, she has been an exemplar of success, personally & professionally. Having seen a tough childhood, she worked as a 75 cent/hr teller at a bank, played a cocktail waitress while at the University of Wisconsin, and was diagnosed with breast cancer on her 2nd day as the CEO at Autodesk Inc. Many had written her off, but she returned to office after just four weeks of medical leave. 14 years later, when Bartz left Autodesk, its revenues had grown by over 400% to $1.5 billion – incredible growth for a company that only focussed on 2-D and 3-D technological designs. Bartz had insisted on maintaining that “core focus” all along.

Her next job was to restore order in the house of Yahoo! (she was appointed as the its CEO in January 2009). Many called it Dutch courage. They were right. Today, Bartz rates her first year at the job a “B-minus”. But such mea culpa won’t help her cause. She needs to have an answer ready for investors who have an enigmatic poser for her – “What is Yahoo!?”

Vexatious is what you would call Yahoo!’s financials for the past two years. Even the last quarter was disappointing. On July 21, 2010, Yahoo! reported a stagnated quarterly topline growth. Its revenues for Q2, 2010, stood at $1.6 billion, 0% change y-o-y, a time when rivals like Google reported a 24% rise in topline. At a time when ad-spends had started increasing, Yahoo! had failed to suck dry the opportunities. But this was just a trailer. As per estimates by Oppenheimer & Co., Yahoo!’s annual revenues will fall y-o-y by 28.7% to touch $4.64 billion for FY2010. Spencer Wang, Analyst, Credit Suisse tells B&E from New York, “We believe the 2Q10 results highlight our longer term concerns surrounding the relevancy of portals & monetisation. Yahoo! attributed the revenue shortfall to a late quarter pullback in ad spending. We remain concerned about the potential for share losses in display to newer competitors. In addition, usage metrics remain on a down trend. This is worrisome and may suggest Yahoo! has not solved its relevancy issue .” True, Yahoo!’s page views record has worsened over time. It was down 4% in Q2, 2010, as compared to 0% in Q1, 2010, +2% in Q4, 2009 and +5% in Q3, 2009. Jordan Monahan, Analyst at Goldman Sachs in the US, adds to B&E, “Yahoo! may prove the canary in the media coal mine who first signals a slowdown. Other media companies have reported/cited no slowdown. We suspect that many advertisers view Yahoo! display as a more discretionary buy than online/offline mass media.”

Over the past few years, Yahoo! has lost direction. Bartz started with promises – slashing jobs by 5% (till date), closing down NPAs like its Personal dating and GeoCities sites, cutting Marketing and R&D costs (total opex for FY2009 fell by 23.3% y-o-y to $3.21 billion, a figure that is forecasted by Goldman Sachs to fall by 8.7% to $2.93 billion in FY2010). But even today, much remains undone.



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Thursday, August 09, 2012

Just keep all those pedals busy!

A generous dose of aggression, mixed with a reasonable amount of caution; would hold Indian IT firms in good stead over the next few years, says Virat Bahri of B&E

In the list of phoenix sectors, one would rightly consider IT as an anomaly. Yes, Lehman’s aftermath was crippling; but the IT sector wasn’t exactly getting buried last year. However, there was a crash landing of sorts that the sector faced, when some of their most cherished clients started freezing budgets; even as global warming continued to defreeze the globe. Avinash Vashishtha, Chairman and CEO, Tholons (also Founder, neoIT & Co-Author, The Offshore Nation), sums it thus, “Growth had stalled to a scenario of flat to marginal growth. Pricing pressure was huge; most clients got pricing discounts from 5-15%. Margin on new contracts in 2009 was anywhere from -5% to 0%.” All in all, the scenario was grim.

From that perspective, the Big 3 do seem to be providing a glimmer of hope, as far as Q3 results are concerned. Infosys has posted a revenue of $1.23 billion, with a q-o-q growth of 6.8% (a yoy growth of 5.2%), while PAT was at $334 million; a qoq growth of 5.4% and yoy decline of 0.6%. Wipro Technologies has posted a revenue of $1.13 billion in its IT services business, a growth of 5.8% sequentially and 2.4% yoy; and PAT at $259 million; a growth of 19% yoy. TCS has also shown signs of a robust recovery. Its revenues for the period stood at $1.64 billion (yoy rise of 10.3%) and net profit at $384 million; up by a strong 38.9% yoy.

So is this the calm after the storm? Indeed, considering that the outlook was majorly flat to negative for most IT companies last year, the growth figures have brought much needed cheer. When contacted, the Infosys spokesperson told us, “We can say that the worst is behind us and definitely our guidance has gone up as a result. The indications are that budgets will be flat but offshore-outsourcing will go up. But we want to still be cautious in this environment because one, it is still recovery in progress and two, the clients IT budgets are yet to be finalized.” Mindtree, which also declared its quarter results recently, voices a similar view. MindTree CEO & Managing Director Krishnakumar Natarajan elaborated to B&E, “In October 2008, customers were in a state of shock; the budgeting cycle was on a month by month basis. Customers are now more confident and appreciate the edge we provide them in areas like product engineering.” With regard to outllook for 2010, he said that customers are in the stage of freezing specific spending for 2010, so it would be early to give exact projections.

Despite that devil in the detail, IT majors are keen on getting their hiring plans back on track in the coming fiscal. The Big Three have together added over 16000 employees this quarter. There is an increased focus, however on lateral hires (experienced people). Mindtree also added some 463 people in the quarter. Is that a sign of early aggression? It seems that the growth in business has given these companies enough confidence to step on the gas w.r.t. hiring. The Infosys spokesperson tells us, “Growth itself will give a lot of buffer to make the investments we want to make and maintain our margins. Revenue growth, along with the utilization going up, has given a buffer to margins and compensated to some extent the wage hikes and rupee appreciation. With continued growth, we expect this will be the case in coming quarter as well.” Moreover, as Natarajan opines, “As the year progresses, we should be getting the opportunity to get prices back a little up.” The issue of rupee appreciation could continue to trouble Indian IT majors going forward as it impacts margins. Tech Mahindra would particularly face problems since it acquired Satyam; which has a substantial pound billing.

It may seem as the beginning of a recovery for some, but Avinash Vashishtha cautions that it would be premature to say that we would be back to pre-downturn levels soon. He reiterates that Q3 results have been particularly good for larger IT players, largely because their existing clients have started reactivating their offshoring contracts. Moreover, they are much more confident of offshoring as a business model, since cost cutting has become even more critical to them post the recession. According to Avinash, true numbers should start coming in within a 6-9 month cycle. Mid-tier firms may continue to face problems as their clients haven’t yet started warming up to offshoring in the true sense.

According to a 2010 CIO survey by Gartner Executive Programs (conducted from September to December, 2009), IT budgets will be largely flat in 2010, with a global weighted average growth of 1.3% over 2009. That’s a significant improvement, considering that they declined by 8.1% in 2009 over 2008. Mark McDonald, group VP and Head of Research, Gartner EXP, “As the economy transitions from recession to recovery, enterprises will transition their strategies from cost-cutting efficiency to value-creating productivity.”


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Wednesday, July 18, 2012

Facebook’s Future, Zuckerberg’s Choice!

While The World debates over when Facebook will go Public and what its Worth would be, Mark Zuckerberg is Worried about a Decision he has to make – Sell-off his 24% Stake & Bid adieu to Facebook or alter The Very Business Model by Diversifying. What should He Choose?

How much is Facebook worth? Actually, the 26 year-old founder & CEO of Facebook – Mark Zuckerberg, doesn’t care. He publicly claims so. In fact, he proved it when he outplayed a clever Wolf’s bait (Michael Wolf, the-then President of Viacom’s MTV Networks) in the fall of 2005. The 19 month-old Facebook, was then, only famous in American circles. To befriend Zuckerberg, Wolf proposed a jet ride from San Francisco to Westchester (NY). During the five hour-long flight, Wolf postulated that Zuckerberg should consider selling a stake in Facebook to Viacom. That was around 10 pm on a cold December night of 2005.

The following month, Wolf flew to Palo Alto, to propose a stake purchase to Zuckerberg. He declined. Another month, another attempt; only this time, Wolf had no Power Point ready and underwent a more delicate experience. He got to visit the youngster’s one-room untidy apartment. The outcome however remained unchanged – Zuckerberg yet again declined Wolf’s $1.5 billion offer for a 100% stake in Facebook. That was 3 pm on a February afternoon of 2006.

Many thought that the Harvard drop-out had then caught the wrong end of the fishing line. He hadn’t. Today, Zuckerberg is the youngest self-made billionaire on the planet, worth $4 billion and owns 24% stake in a much bigger Facebook, with a user base of over 580 million (it crossed the 500 million mark in April last). Better still, his social networking machine is now cash-flow positive and after making $700 million in revenues in 2009, is forecasted to touch $2 billion this year. It also has plans to go public sometime between late 2011 & early 2012. So will the market consider this intangible web property worth billions of tangible green bills?

Over the years, Zuckerberg has accepted some overtures that have certified the market values of his brainchild. In March 2008, when Microsoft signed a contract that included a 1.6% stake buy in Facebook for $240 million, it put the value at $15 billion. The $4 billion current valuation of Zuckerberg’s stake also puts Facebook’s market value at a close $16.7 billion. There are also experts that are optimistic about a post-IPO Facebook. Rick Sturm, CEO of New York-based Enterprise Management Associates (EMA), tells B&E, “The Mcap of Facebook is likely to be around $34 billion.” We have our doubts.

Even if we assume Facebook to be the next big wave after Google, its value (considering the ratio of Google’s Mcap of $27 billion on Listing day and its revenues the previous year) comes to only $11 billion – exactly what US-based Next Up Research’s independent forecast and Felix Investments’ $25 per share offer value it at. There is also a great similarity between the two online companies in case of revenue streams, which gets us to expect a Google-like market reaction to Facebook’s IPO. [When it went public, Google was earning 99.97% of its revenues from ads, almost equal to Facebook’s 100% today.] There is however a small hitch – six years back, the market was bullish and investors were willing to dole out billions without much of a thought. Today, the sentiments are more “cautious”. Also, Facebook’s user base of above 580 million does not imply the same number of “unique” visitors. There is bound to be some double count, which weakens Facebook’s case (which was not the case with Google’s model when it went public in 2004). In short, the Mcap could fall short of $11 billion. Says Massachusetts-based Analyst Richard Louis to B&E, “The market value of Facebook is unclear. At this time, it is just an alternative site to post information. Over the years, its value will fall if it doesn’t diversify.”

So will Facebook become a fad? Louis says it already is: “Facebook is already a fad. I don’t think it is going to grow out of that.” Pessimism apart, the giant’s credit notes being reduced to scribbled sheets appear quite a possibility. And the market has proven to be a fickle group; Facebook cannot overlook this truth. Speaking to B&E from California, Jeremiah Owyang, Partner, Altimeter Group says, “Facebook is at risk. Other social networks became complacent, got sold to larger media entities, or failed to invigorate their talent tools and suffered as a result.”

Debate is also on that Facebook could become larger than Google. Speaking to B&E from Chicago, Andrew Lipsman, Senior Director of research agency comScore Inc., sounds optimistic. He says, “Facebook can eventually becoming the largest web property in the world (currently it is #4). But this would still take a few years. To get there, it would need to get traction in some of the larger Internet markets where it still has a limited presence, such as Japan, S. Korea, Russia & Brazil.” But Sturm doubts it. Says he, “It is unlikely that Facebook will become bigger than Google. It is riding the wave of popular infatuation. Things can go wrong for Facebook. What if some hacker found a way to compromise its security? There are many possibilities!” Facebook also has to move away from relying only on online ads. While Facebook is growing, so is Google. Not content with being the dominant search engine, Google continues to attempt to mean more things to more people. Its latest innovation is Google RealTime. In short, cautious, but deliberate diversification will benefit Facebook, as Owyang of Altimeter says, “Facebook will need two strategies to maintain leadership: Innovate & integrate features at all consumer touchpoints, so it’s no longer just a destination strategy.” This typically implies that Facebook has to look beyond social-networking communities.


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Monday, July 16, 2012

Three CEOs in six years and the inability to steady a concrete well set up business – this is what HP

Three CEOs in six years and the inability to steady a concrete well set up business – this is what HP, one of the founding companies of Silicon Valley has to show. How can they put the house in order? 

The pay premium of these CEOs is negatively correlated with the future performance of the firm that has hired. In other words, the bigger the CEO, the worst he performs in the new job. According to a study commissioned by Hay Group in 2007, around 80% of Fortune’s Most Admired Companies chose internal candidates as CEOs! In fact, Booz Allen’s benchmark 2008 CEO research documents that 80-83% of CEO recruits are insiders! The research further goes on to prove that operationally and statistically, ‘insider CEOs’ outperform ‘outsider CEOs’! Next time, it would be advisable if the HP board could look for a worthy suitor for the top job from a reservoir of 350,000 employees.

But what is more disturbing is how HP has been tampering with a well structured strategy for almost 10 years now. The acquisition of Compaq made it the largest IT company in the world. Hurd took it forward pretty well. Under his tenure, HP crossed the $100 billion m-cap mark for the first time. However, Apotheker’s focus on software unleashed a chain of cataclysmic events, which has today made the company a laughing stock. With the announcement of Whitman as President & CEO, HP’s stock price declined to an all time low of $22.2 from a point where it had even traded at around $60 in April 2010. Speaking to B&E from Chicago, Michael Holt, Chartered Financial Analyst, Morningstar, sounds his concern “Meg Whitman is a surprising choice for the permanent CEO position: She lacks experience leading a firm of HP’s size, managing enterprise-focused strategies, or nurturing critical channel relationships that weakened during Leo Apotheker’s tenure.” The board continues to stand by its decision of converting HP into a software giant and Whitman is yet to decide as to what will become of the PC business. No doubt that the Personal Systems group generated profits of just $2 billion on revenues of $40.74 billion, but then it was this business in the very first place that made HP the largest IT company. If HP does really want to go the IBM way, then the most strategically sound decision at this point of time would be to retain its PC business and use the money to fill in the missing pieces of the software & enterprise businesses. IBM could make one of the most successful transitions in corporate history primarily because its enterprise, software and services businesses derived immense synergies from each other. HP doesn’t have a line up of developer platforms or general purpose enterprise softwares. It’s heavily dependent of others for enterprise software. Without all this in place, HP cannot even become a respectable enterprise software outfit let alone resemble IBM. It’s time they got on to fine tuning their product strategy as well as their head hunting acumen.



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