Venu's Collections

China and India: The Hare and the Tortoise

noreply@blogger.com (Venu Kumar) — Fri, 01 Dec 2006 20:17:00 +0000

In a recent editorial published in Economic Times, a leading business news daily in India, I likened the economic reforms initiated by Dr. Manmohan Singh in 1992 compared to the "Hare and Tortoise" story -- where China was the Hare and India the Tortoise. Long before Experts predicted that India will eventually catch up with China and overtake it.
The latest growth rate figures for the second quarter growth in the fiscal year 2006-07, released by the Central Statistical Organization, come close to vindicating those forecast; the Indian economy is already growing at the rate of 9.2% not far from the 9.5 reported for China recently.
The stock market in India, in retrospect, responded rationally to the prospects of Indian economic growth. Between 2001 and 2006, the stock indices in India have risen by four times while growth rates increased from about 4.5% to twice as much. In contrast to China, institutional development and deregulation have progressed in tandem in India. Chinese stock market indices move much more erratically reflecting the lack of depth in that country's capital markets. This also implies that capital allocations in India are driven much more by economic considerations compared to China.
In its last issue, the Economist commented that the potential growth of India is only 6.5% and that the current growth rates are not sustainable. The argument is based on the premise that India's savings rate at 30% trails China's at 45%. This is a flawed argument since it does not take into account the efficiency of capital use in India.
The current rate of growth is not only sustainable but it has also very likely exceeded 10% according to Surjit Bhalla, an Indian economist and investment banker. There is also as yet untapped potential for growth in infrastructure and the farm sector and the Government is working to implement reforms to get this underway.
I will not be surprised if growth rates eventually touch 15%

On Nov 16th Economic times
Reacting to some global experts who likened China and India to the tortoise and the hare in Aesop's famous fable, Jinzhen said "To use the analogy of the race between the tortoise and the hare for the competition between China and India is fantastic." "Only when the hare (China) naps does the tortoise (India) overtake the hare. China will never 'nap' in the process of its economic development," he told 'People's Daily,' the official mouthpiece of the ruling Communist Party of China (CPC) in a recent interview ahead of Chinese President Hu Jintao's visit to India

The Word Is SONY...and Its World Is Tumbling

noreply@blogger.com (Venu Kumar) — Thu, 23 Nov 2006 09:39:00 +0000

SONY...The most comprehensive entertainment companies in the world...Historically noted for creating its own in-house standards... Name synonyms to Reliability with Passion for Innovative Technology is reeling under sever pressure. A company with Annual sales of $69 Billion and employing over 160,000 people is looking for a break thru. Can its flag ship launch of PS3 with Blue Ray technology save "Sony World".

Play Station Launch Story:
Sony's trouble story began earlier this year, when the wheels were falling off the train when Sony started delaying the release of the new PlayStation 3. The first excuse Sony made was that licensing issues were causing the delay from Spring 2006 to November 2006, but that was not the real reason. At Long last when Sony Play station 3 (PS3) was released, on Nov 17th, Sony had horrendous shortage of game consoles to sell. Sony made the best of the bad situation or at least made sure that the launch got plenty of hype.

Technical details:
Technically PS3 is a very impressive creation. Sony took two radically new technologies and successfully incorporated them into a consumer product. The heart of the PS3 is a new Cell broadband engine processor, a joint development Of Sony, Toshiba and IBM.Games are delivered on Blue Ray Disc’s, a high definition DVD that can handle up to 50GB of data. The combination of a super fast processor optimized for Graphics and almost unlimited data storage allows game designers to achieve realism unprecedented in the console of games. The PS3 can play high definition Blue ray movies as well as normal DVD's... but will that be good enough?
The bottom-line Question becomes...Will the consumers find the PS3 worth $200 more than Microsoft Xbox 360?
Sony could have made this equation easier, if it used a month that the PS3 was delayed, mainly by problems in making the blue ray drive, to get the online component of the Play station experience (Play station Store) into shape. Its failure to do so is a major mystery. The most important component of the online experience will be multi player gaming and this is becoming major strength of the Xbox. Sony made a good move by making the Play station network free, while Microsoft charges $50 per year for Xbox Live...but will take a while as the sale of lot more PS3's before we could tell how good there online gaming is.
Sony clearly blew it with other network features as well. The Play Station Store is mainly a way to download games and high definition movie trailers, but the browser interface is very awkward to use. Strangest of all, the PS3 is devoid of the software required for connecting to other devices in the home like computers of other devices. For example if u want to play music on PS3 u have to connect a memory card and a external hard drive or a player such as an I-pod directly to the console and transfer the songs from the device to the consoles hard drive. The same is true for movies or other video and forget about playing any copy protected media such as songs purchased from I-tunes. Even if Ur the one of handful of people who bought the music from Sony connect store. They won’t play in PS3 and this is very odd.

Financial Details:
The future of Sony CEO Howard Stringer rest on the success of this shinny black PS3.
Sony is far behind its competitors in the fast growing LCD flat-screen TV market and has lost its decades-long edge in portable music devices to Apple Computer's I-Pod players. With the failure of its TV, Music electronics businesses and its up-and-down Movie business, it has relied more and more on the video game business to keep profits up. But now even its video game business can't save the company. In fact, it's the video game business that could put the whole company right down the toilet. Here is it why

Research firm iSuppli has reverse engineered the PS3 and has estimated that it will cost Sony $805.85-$840.35 for each unit sold. The materials price estimates do not include marketing, software development, or other costs, which will push Sony's total cost per console even, be higher. With Sony pricing the console at $499 and $599 depending on the model, it means that they will be eating a loss of between $241 - $306 every time someone buys a new console. In contrast, the materials cost for the Xbox 360 is estimated at only $501, and should continue to drop as the console ages. While Sony pays $200 to $300 for each raw Blue-ray drive, Microsoft pays only $20 for the simpler DVD drives. Of course, the single most costly item in the PS3 is the Blue-ray drive. Blue-ray would add at least another $200 or so to the price of the machine. And this cost is intended keeping in view promoting Blue Ray disc's which is a long term objective is for Sony.
Although the PS2 captured more than a 70 percent share of the previous generation of console sales, with Microsoft already predicted to sell 10 million Xbox 360 consoles and Nintendo selling 4 million of its new Wii consoles, Sony plans on making 6 million PS3 units before April. Let's say that they sell every one of them at full retail price. With what we know about the materials price -- particularly the price of Blue-Ray players -- let's say that they will lose only $270 for every PS3 they sell, The loss would be to an amount of $1.6 billion.
The bad news for Sony this year isn't restricted to video game competition. The company is also liable for a large share in the laptop battery recalls being conducted by Dell and Apple. Nearly 6 million batteries have been recalled in the past two months -- all of them manufactured by Sony. The battery fiasco alone could cost Sony as much as $500 million.
Devoting its cash reserves to losses in the video game and computing sectors, with no guarantee of future profits for another two years, could send the company's stock into a tailspin, once its investors realize the full measure of the grave situation for the company.

Here is how u can save Sony:
If u are also a great fan of Akio Morita after reading the book Made In Japan like me..
Stop complaining that the PS3 costs $600. In order to cut down on its losses,-- it'll require that you buy two games in order to get a machine. That'll boost the price for you to around $725 or so.
But there's more! Want an HDMI cable? That'll be another $100 to $125. Now we're at $850 or so.

You've got a Blue-ray player, so you'll want a few Blue-ray movies -- Sony titles only, of course. Buy six of them while you're at it! At an average list price of $25 each, we're talking another $150. That pushes our total price to an even $1,000.That'll go a long way to saving Sony.

Now who's going to save you?

ERP : Battle Space : SAP Dominates While Oracle Consolidates

noreply@blogger.com (Venu Kumar) — Tue, 21 Nov 2006 23:06:00 +0000

Alright...this will be a Soap-Opera-Class Entertaining and Interesting Story to track all my life, as most of us do, As the dust never seems to settles in the battle of ERP dominance between Oracle and SAP. This would be long story made short with Quotes to hear from heads of both companies...and don't make any judgments from them since the twist in the story is still to unfold and will be long time before we can conclude...Check and Mate.

Larry Ellison, 62, CEO of Oracle, those who know him, say, He is a Master of Applying and Executing My all time most favourite Book -The Art of War-Sun Tzu’s precepts to the modern-day warfare of business competition.
One of basic tenet from the book notes,"A smaller force can beat a larger one by causing its rival to respond before thinking." exactly so..

Ellison Recent Key Remarks of SAP and its CEO:

"SAP appears to be rethinking their strategy as they lose application market share to Oracle and confront the difficulties of moving their application software to a modern Service Oriented Architecture [SOA],” said Ellison in the release. “They’ve just announced that they are delaying the next version of SAP applications until 2010. That’s a full two years behind Oracle’s scheduled delivery of our SOA Fusion applications.
And now [SAP CEO Henning] Kagermann is talking about an acquisition strategy to augment SAP’s slowing organic growth.These are major changes in direction for SAP."

Ellison's comments were "a complete misrepresentation'' of SAP's products and strategy, Walldorf, Germany-based SAP said the same day. Only once before, in 2000 when Oracle said it was first in sales of business-management software, had SAP issued a statement responding to Oracle claims. "Both times the distortion of facts about SAP were so significant we had to clear the record,'' SAP spokesman William Wohl said in an interview.

Now.. Why did Ellison do this ?
Ellison's tactics are meant to validate Oracle's place next to SAP.Ellison's efforts were aided by SAP in July, when SAP CEO Henning Kagermann said his company lost market share in the $25 billion industry for business-management software to Oracle and Microsoft Corp.
SAP never should have reacted to Oracle's statements because it makes customers and investors view Oracle as a peer to SAP, when they aren't.

"They are trying to set the boundaries of the discussion,'' Daniel Sholler, lead SAP analyst at Gartner Inc., a Stamford, Connecticut-based research firm, said in an interview.
"It has no effect on customers except to make it clear that Oracle should be compared to SAP.''

SAP and Oracle are in the middle of overhauling their software toward a so-called Service-Oriented Architecture, or SOA, which allows customers to upgrade and change management software more easily. SAP said all of its products will be able to run on the new platform by next year, and will only offer enhancements to that platform until 2010.

Actual Market Share:

According to Boston-based AMR Research, SAP had 20.6 percent of the applications software market in 2005, up from 19.5 percent in 2004. Thanks to $20 billion of acquisitions in two years, Oracle's market share almost doubled in 2005 to 10.1 percent from 5.2 percent.

The $10.6 billion PeopleSoft acquisition in January 2005 and the $5.85 billion purchase of Siebel a year later made Oracle the second-biggest maker of business-management software, behind SAP. In September, Ellison said the purchases allowed Oracle to "leapfrog'' over SAP in several industries, including retail, banking and telecommunications.

Ellison has also employed Sun Tzu's statement,"All warfare is based on deception'' in asserting that Zale, which SAP announced as a new customer about a year ago, will switch to Oracle because, the CEO said, the German rival "made some promises we knew they couldn't deliver.''

Oracle reported application license sales grew 80 percent in the first quarter. Stripping out sales from Siebel and other recent acquisitions, application license sales gained 47 percent.

Software license revenue, is a key barometer of future prospects as the company gains further revenue in the future off of maintenance and consulting.

“We’re rapidly taking applications market share from SAP,” Oracle President Charles Phillips said in the release. “Q1 was the second consecutive quarter that Oracle’s applications new license sales growth was 80% or more. That’s ten times SAP’s 8% new license sales growth rate in their most recently completed quarter.” taking absolute joy in poking its finger in the eye of rival SAP.

Charles Di Bona, an analyst with Sanford C. Bernstein, disagrees with Oracle's math. Factoring in Siebel Systems' third quarter sales, before its acquisition, Di Bona estimates Oracle's organic growth for the quarter at 2.2 percent.

Q Results For Oracle :

For the fiscal first quarter ended August 31 which blew away expectations across the board. Revenue totalled $3.6 bilion, nicely ahead of the Street consensus of $3.47 billion. The company reported 13 cents a share in GAAP profits, or 18 cents on a non-GAAP basis; both were several pennies ahead of Street projections. Database and license revenue grew 15%; application revenue grew 80%; services revenue was up 33%.
In its press release announcing the numbers, Oracle President and CFO Safra Catz said that the company “exceeded our guidance on every metric…we are now in year three of our five-year plan targeting EPS growth at 20% per year.”

Important Statments from Oracle :
"We think Oracle’s current strategy is helping us overtake SAP and win market share. Let me start with the first key success factors for SOA applications, and that is middleware... SAP is sticking with a proprietary approach to middleware while Oracle has adopted a completely standards-based approach from middleware and our next generation of fusion applications.
As the market more deeply embraces service oriented architecture, SAP’s non-standard ABAP approach to middleware is hurting their sales and helping us win share...
SAP has good industry knowledge and products in some industries, like oil and gas, but they lack industry-specific knowledge and products in most other industries.... Oracle’s acquisition strategy has moved us ahead of SAP in several industries -- banking, telecommunications, retail, and so on. Oracle will continue to acquire industry knowledge and products. We believe that SAP must do the same, or SAP will become progressively less competitive in several industries and continue to experience slowing organic growth." explians Larry Ellison.

"Well, I think it’s hard for our share gains to accelerate. I mean, SAP’s growth in their most recent quarter was 8% and our growth in our last two quarters was over 80%, so I cannot imagine that our rate of gain will accelerate, but I think our rate of gain against SAP will stay very, very high. I think it includes gains in ERP, gains in CRN, and gains in industry-specific applications" Ellison remarks.

The Other Side of Story: 85% win Rate for SAP

Oracle claimed 88 head-to-head wins against SAP.

Leo Apotheker an independent analyst team gave the detail of the analysis of head-to-head between SAP and Oracle.

"We chose not to compete on one of these deals. Six were not competitive situations, and all occurred before Q107 of August quarter, first quarter. Twelve of them we have no record on, so I cannot comment because we did not compete. We were not in the game. Seven were not a win against us. They must have counted some other wins. Four were indeed losses for us, so they did win four against us.
Just to put things into perspective, in this quarter, we had 247 competitive head-to-head against Oracle, of which we won 209. That is an 85% win rate."

"What we do is we take our sales figures. We compare it to the Oracle Siebel entity last year, compared to the combined entities this year, then you know that SAP has really gained market share again." explained Henning Kagermann, CEO, SAP.

Q Results for SAP:

SAP said net income rose to 388 million euros ($486 million), or 1.27 euros a share, with revenue up 11% to 2.2 billion euros.Software license revenue, a key barometer of future prospects as the company gains further revenue in the future off of maintenance and consulting, grew 17% to 691 million euros in the third quarter. Analysts had expected SAP to generate 14% growth.
License revenue had grown just 8% in the second quarter. “We reported a strong third quarter with an impressive win rate and double-digit software revenue growth in all regions,” said Henning Kagermann, chief executive, in a statement.
Oracle, SAP’s leading rival, reported a 19% profit rise in the quarter ended Aug. 31. SAP fared well in Oracle’s home market, with U.S. license revenue up 1 5%.
“This long track record of outstanding performance can be largely attributed to our successful strategy of growing SAP organically. This disproves our major competitor’s claim,” Kagermann said in a clear reference to Oracle.

Conclusion :
Oracle's enthusiasm for bad-mouthing the competition doesn't help the industry.
Oracle's made full-page advertisement that mimicked SAP's ad campaign.
The Oracle ad said: "Computer Associates (CA) Runs SAP.''
The implication was that CA's well-publicized troubles, including a $2.2 billion accounting fraud, were connected to the SAP software it uses. CA has applications from both rivals. These kinds of guerrilla marketing tactics, combined with puffed up rhetoric and carpet bombings are tedious distractions.

But ultimately, knowing how the enterprise software sales cycle works, experts guess, the playing field is far more balance than what either side contends.
For a while, SAP is just dominating Oracle (particularly in the U.S.).

Yahoo! Eating Peanut Butter, Finds its Structure Messy & Strategies Fuzzy

noreply@blogger.com (Venu Kumar) — Mon, 20 Nov 2006 19:41:00 +0000

Straight from horse's mouth, allegdly from Senior V.P of Yahoo, Brad Garlinghouse, an internal memo was forwarded all over the place late Friday, and made head lines in WSJ Saturday morning.

Experts are guessing this was written with full knowledge that it would be forwarded outside the company, but it still has some strong statements about Yahoo's fuzzy strategy, its duplicate properties, and its messy structure. Among other things, it calls for 15-20% cut in headcount, which should get traders busy on Monday.

Here is the complete long Transcript obtained from WSJ.

Three and half years ago, I enthusiastically joined Yahoo! The magnitude of the opportunity was only matched by the magnitude of the assets. And an amazing team has been responsible for rebuilding Yahoo!
It has been a profound experience. I am fortunate to have been a part of dramatic change for the Company. And our successes speak for themselves. More users than ever, more engaging than ever and more profitable than ever!
I proudly bleed purple and yellow everyday! And like so many people here, I love this company.
But all is not well. Last Thursday's NY Times article was a blessing in the disguise of a painful public flogging. While it lacked accurate details, its conclusions rang true, and thus was a much needed wake up call. But also a call to action. A clear statement with which I, and far too many Yahoo's, agreed. And thankfully a reminder. A reminder that the measure of any person is not in how many times he or she falls down - but rather the spirit and resolve used to get back up. The same is now true of our Company.
It's time for us to get back up.
I believe we must embrace our problems and challenges and that we must take decisive action. We have the opportunity - in fact the invitation - to send a strong, clear and powerful message to our shareholders and Wall Street, to our advertisers and our partners, to our employees (both current and future), and to our users. They are all begging for a signal that we recognize and understand our problems, and that we are charting a course for fundamental change, Our current course and speed simply will not get us there. Short-term band-aids will not get us there.
It's time for us to get back up and seize this invitation.
I imagine there's much discussion amongst the Company's senior most leadership around the challenges we face. At the risk of being redundant, I wanted to share my take on our current situation and offer a recommended path forward, an attempt to be part of the solution rather than part of the problem.Recognizing Our Problems
We lack a focused, cohesive vision for our company. We want to do everything and be everything -- to everyone. We've known this for years, talk about it incessantly, but do nothing to fundamentally address it. We are scared to be left out. We are reactive instead of charting an unwavering course. We are separated into silos that far too frequently don't talk to each other. And when we do talk, it isn't to collaborate on a clearly focused strategy, but rather to argue and fight about ownership, strategies and tactics.
Our inclination and proclivity to repeatedly hire leaders from outside the company results in disparate visions of what winning looks like -- rather than a leadership team rallying around a single cohesive strategy.
I've heard our strategy described as spreading peanut butter across the myriad opportunities that continue to evolve in the online world. The result: a thin layer of investment spread across everything we do and thus we focus on nothing in particular.
I hate peanut butter. We all should.
We lack clarity of ownership and accountability. The most painful manifestation of this is the massive redundancy that exists throughout the organization. We now operate in an organizational structure -- admittedly created with the best of intentions -- that has become overly bureaucratic. For far too many employees, there is another person with dramatically similar and overlapping responsibilities. This slows us down and burdens the company with unnecessary costs.
Equally problematic, at what point in the organization does someone really OWN the success of their product or service or feature? Product, marketing, engineering, corporate strategy, financial operations... there are so many people in charge (or believe that they are in charge) that it's not clear if anyone is in charge. This forces decisions to be pushed up - rather than down. It forces decisions by committee or consensus and discourages the innovators from breaking the mold... thinking outside the box.
There's a reason why a centerfielder and a left fielder have clear areas of ownership. Pursuing die same ball repeatedly results in either collisions or dropped balls. Knowing that someone else is pursuing the ball and hoping to avoid that collision - we have become timid in our pursuit. Again, the ball drops.
We lack decisiveness. Combine a lack of focus with unclear ownership, and the result is that decisions are either not made or are made when it is already too late. Without a clear and focused vision, and without complete clarity of ownership, we lack a macro perspective to guide our decisions and visibility into who should make those decisions. We are repeatedly stymied by challenging and hairy decisions. We are held hostage by our analysis paralysis.
We end up with competing (or redundant) initiatives and synergistic opportunities living in the different silos of our company.
• YME vs. Musicmatch
• Flickr vs. Photos
• YMG video vs. Search video
• Deli.cio.us vs. myweb
• Messenger and plug-ins vs. Sidebar and widgets
• Social media vs. 360 and Groups
• Front page vs. YMG
• Global strategy from BU'vs. Global strategy from Int'l
We have lost our passion to win. Far too many employees are "phoning" it in, lacking the passion and commitment to be a part of the solution. We sit idly by while -- at all levels -- employees are enabled to "hang around". Where is the accountability? Moreover, our compensation systems don't align to our overall success. Weak performers that have been around for years are rewarded. And many of our top performers aren't adequately recognized for their efforts.
As a result, the employees that we really need to stay (leaders, risk-takers, innovators, passionate) become discouraged and leave. Unfortunately many who opt to stay are not the ones who will lead us through the dramatic change that is needed.Solving our Problems
We have awesome assets. Nearly every media and communications company is painfully jealous of our position. We have the largest audience, they are highly engaged and our brand is synonymous with the Internet.
If we get back up, embrace dramatic change, we will win.
I don't pretend there is only one path forward available to us. However, at a minimum, I want to be pad of the solution and thus have outlined a plan here that I believe can work. It is my strong belief that we need to act very quickly or risk going further down a slippery slope, The plan here is not perfect; it is, however, FAR better than no action at all.
There are three pillars to my plan:
1. Focus the vision.
2. Restore accountability and clarity of ownership.
3. Execute a radical reorganization.
1. Focus the vision
a) We need to boldly and definitively declare what we are and what we are not.
b) We need to exit (sell?) non core businesses and eliminate duplicative projects and businesses.
My belief is that the smoothly spread peanut butter needs to turn into a deliberately sculpted strategy -- that is narrowly focused.
We can't simply ask each BU to figure out what they should stop doing. The result will continue to be a non-cohesive strategy. The direction needs to come decisively from the top. We need to place our bets and not second guess. If we believe Media will maximize our ROI -- then let's not be bashful about reducing our investment in other areas. We need to make the tough decisions, articulate them and stick with them -- acknowledging that some people (users / partners / employees) will not like it. Change is hard.
2. Restore accountability and clarity of ownership
a) Existing business owners must be held accountable for where we find ourselves today -- heads must roll,
b) We must thoughtfully create senior roles that have holistic accountability for a particular line of business (a variant of a GM structure that will work with Yahoo!'s new focus)
c) We must redesign our performance and incentive systems.
I believe there are too many BU leaders who have gotten away with unacceptable results and worse -- unacceptable leadership. Too often they (we!) are the worst offenders of the problems outlined here. We must signal to both the employees and to our shareholders that we will hold these leaders (ourselves) accountable and implement change.
By building around a strong and unequivocal GM structure, we will not only empower those leaders, we will eliminate significant overhead throughout our multi-headed matrix. It must be very clear to everyone in the organization who is empowered to make a decision and ownership must be transparent. With that empowerment comes increased accountability -- leaders make decisions, the rest of the company supports those decisions, and the leaders ultimately live/die by the results of those decisions.
My view is that far too often our compensation and rewards are just spreading more peanut butter. We need to be much more aggressive about performance based compensation. This will only help accelerate our ability to weed out our lowest performers and better reward our hungry, motivated and productive employees.
3. Execute a radical reorganization
a) The current business unit structure must go away.
b) We must dramatically decentralize and eliminate as much of the matrix as possible.
c) We must reduce our headcount by 15-20%.
I emphatically believe we simply must eliminate the redundancies we have created and the first step in doing this is by restructuring our organization. We can be more efficient with fewer people and we can get more done, more quickly. We need to return more decision making to a new set of business units and their leadership. But we can't achieve this with baby step changes, We need to fundamentally rethink how we organize to win.
Independent of specific proposals of what this reorganization should look like, two key principles must be represented:
Blow up the matrix. Empower a new generation and model of General Managers to be true general managers. Product, marketing, user experience & design, engineering, business development & operations all report into a small number of focused General Managers. Leave no doubt as to where accountability lies.
Kill the redundancies. Align a set of new BU's so that they are not competing against each other. Search focuses on search. Social media aligns with community and communications. No competing owners for Video, Photos, etc. And Front Page becomes Switzerland. This will be a delicate exercise -- decentralization can create inefficiencies, but I believe we can find the right balance.
I love Yahoo! I'm proud to admit that I bleed purple and yellow. I'm proud to admit that I shaved a Y in the back of my head.
My motivation for this memo is the adamant belief that, as before, we have a tremendous opportunity ahead. I don't pretend that I have the only available answers, but we need to get the discussion going; change is needed and it is needed soon. We can be a stronger and faster company - a company with a clearer vision and clearer ownership and clearer accountability.
We may have fallen down, but the race is a marathon and not a sprint. I don't pretend that this will be easy. It will take courage, conviction, insight and tremendous commitment. I very much look forward to the challenge.
So let's get back up.
Catch the balls.
And stop eating peanut butter.

HP's Q Results Awesome;Surpasses IBM and Dell.

noreply@blogger.com (Venu Kumar) — Mon, 20 Nov 2006 07:02:00 +0000

HP's Q4 earnings grew to $1.69b, or $0.60/share, from $416m, or $0.14/share last year, on sales of $24.6 billion, vs. $22.9b last year. To be fair, HP had $1.1b in restructuring costs last fiscal Q4. Excluding restructuring charges this Q4, HP earned $0.68, vs. analyst estimates of $0.64. Sales came in ahead of analysts polled by Thomson, expecting $24.1b.
CEO Mark Hurd is credited with controlling costs as the company expanded its share in key markets. Still, Hurd commented, "We certainly aren't taking any victory lap here." According to Gartner research, HP overtook Dell as the world's largest PC maker. And its FY2006 revenue of $91.7b surpassed IBM to become the world's largest IT company.

But there was a dark cloud over financial news as HP disclosed in a regulatory filing that the Securities and Exchange Commission has issued a formal order of investigation into the tactics used in the company's boardroom spying probe.
The Federal Communications Commission has also requested documents related to HP's effort to unmask the source of boardroom leaks to the media, and HP faces five shareholder lawsuits related to the investigation, according to the filing.
HP had previously disclosed that it was the subject of inquiries by the SEC, the U.S. Attorney's Office for the Northern District of California, a congressional panel and California's attorney general.

HP's shares closed 0.85% higher at $40.13, after hitting a 52-week high of $40.85 on Wed.

Background of the Indo-US nuke deal

noreply@blogger.com (Venu Kumar) — Sun, 19 Nov 2006 00:37:00 +0000

On November 17, 2006 the US Senate passed the bill to implement civilian nuclear energy cooperation with India, with a majority of 85:12. A total of 18 amendments were proposed during the debate and all .Killer. amendments were rejected. The amendments that would have either wrecked the deal, forced re-negotiation or made the implementation stage quite difficult, were part of the rejected "Killer" changes.
Circa July 2005: India and the USA reached an agreement on the separation of civil and military nuclear plants and technology transfer for civil nuclear plants. The USA would help develop the civil nuclear power programme in India in return for New Delhi placing its civil nuclear facilities under safeguards of the International Atomic Energy Agency (IAEA).
Circa March 2006: India and the USA crossed a major milestone in civil nuclear cooperation after the Prime Minister, Dr Manmohan Singh, and the visiting US President, Mr George Bush, reached an understanding on the implementation of the July 2005 agreement on this issue. India had agreed that 14 of its civilian nuclear reactors would be open to international safeguards.
Since the meeting in March this year there has been much debate on both sides about the logic, benefit and timing of the deal. The placing of the fast-breeder programme, the bedrock of India's strategic weapons programme, under IAEA was the bone of contention for India. There were also internal differences on the possible impact of the deal on our nuclear programme. For the USA, there was a furore about making exceptions about declassifying nuclear secrets to a nation that was not a signatory to the Non Proliferation Treaty (NPT).
The USA also needed approval of both the houses to waive some provisions of the Atomic Energy Act to ratify the treaty. Finally given the trust placed on India due to its relatively clean past in terms of non proliferation and the geo-economical importance of India to the USA, the deal was passed.
So what's next?
Now that the Senate has approved the bill, it will have to reconcile the differences with the House of Representatives. version of the bill, and then both the chambers would have to vote again on a final bill in December 2006. Once this is done the Nuclear Supplier Group will be approached to adjust its guideline for India and the IAEA will be persuaded to fashion an appropriate India-specific safeguards agreement.
Indo-US nuke deal.benefits for India
The Indo-US nuke deal brings three key advantages for India.
1) A reliable source of commercial nuclear technology will open
up for India that could possibly go a long way in quenching
India.s current and projected thirst for power.
2) US interests in India will be tied down for a long time to come.
3) India will be at the receiving end of huge foreign direct investment (FDI) into the country. Needless to say that the companies providing products and services for nuclear power plants would be the primary beneficiaries.
Current power generation in India.around 15% short of consumption.
India.s power generation today is approximately 15% below the actual consumption. This results in perpetual power shortages and outages. This gap will grow in the next 10 years, as India moves up the ladder towards the developed world. The projected economic growth of 7-8% over the next 20 years will quadruple India.s energy needs as per TERI.
About 65% of the power in India is generated by coal fired thermal power stations. Gas, hydropower, wind and nuclear power plants generate the remaining 35% of the power. Hydroelectric power provides 15% of India.s power needs with gas providing an additional 10%. A mere 3% of the power is generated by nuclear energy. A cluster of local captive power plants built to meet local needs provide the remaining power needs. The above situation is unlikely to change in the near future unless an un-interrupted very cheap supply of gas comes to India or nuclear power plants are built in quick succession.
..nuclear energy.inevitable for bridging shortage gap
Coal, the main source of India.s energy needs today, has peaked its exploitation. The gas supply from Iran via a pipeline is unlikely to materialise due to the US opposition
and the unpredictable behaviour of Pakistan, the middleman in the gas supply scenario. As a result a host of supply sources like nuclear energy have to be explored. Hence if India.s power generation has to keep pace with the burgeoning economy, nuclear power has to provide a significant component of the deficit. A very plausible scenario to look at is the building of nuclear power plants with US aid.
So what does the deal bring in for Indian Inc???
A nuclear power project requires many conventional items apart from the nuclear reactor components. However, the projects are also required to meet more stringent quality requirements and subjected to elaborate inspection and testing. In a typical nuclear power plant, the design and supply of the nuclear reactor is the onus of the technology provider. However its erection and other engineering and installation works is the area of expertise of an EPC contractor. In India, Larsen & Toubro and BHEL are the foremost EPC contractors that have the expertise and experience of erecting a nuclear power plant. In the following exhibit we have indicated the key products and services that are required for the erection of a nuclear power plant. Also we have given an indicative list of the companies that are capable of supplying these products and services. While preparing the indicative list we have considered the past supply experience of these companies as far as nuclear power plants are concerned.
In a nutshell
The Indo-US nuclear deal is a golden opportunity to tie down US interests in India. The economic development will receive a much-needed shot in the arm. The US businesses will consider India as a better place to do business and divert FDI funds from China to India. In addition the nuclear power plants will go a long way to quench India's growing thirst for power. Needless to say that the companies like BHEL, L&T, KSB Pumps and Honeywell Automation that provide products and services for nuclear power plants would be the primary beneficiaries in this scenario.
Products and services Companies who provide them Project handling (EPC contractor) L&T, BHEL Civil construction works L&T, HCC, Gammon Nuclear reactor L&T Boiler BHEL Boiler feed pumps KSB, Kirloskar Brothers, Mather & Platt, Jyoti Ltd, Bharat Pumps and Compressors Steam turbine BHEL Valves BHEL, L&T, KSB Cooling water condenser BHEL, L&T Heat exchanger Alpha Laval, GEI Hammon Pipes Maharashtra Seamless, Ratnamani Metals and Tubes Control panels Honeywell Automation
Consulting and engineering service Rolta India (technological tie-up with Stone & Webster) .

IBM's Overcome Expectations In Its 3Q Results

noreply@blogger.com (Venu Kumar) — Sat, 18 Nov 2006 21:08:00 +0000

Before IBM reported its quarterly earnings yesterday, no one would have expected the company's crucial global computer services business, which accounts for more than half its revenue, to come up short and still have IBM beat forecasts. Yet, that's exactly what happened, with impressive 3Q sales increases in its hardware and software lines, including mainframes and web applications. Quarterly profits came in at $2.22 billion, or $1.45 a shares
Revenue rose 5% to $22.62 billion, up from $21.53 billion a year earlier despite a global services revenue increase of just 2.7%. Hardware sales improved 8.9%, driven by a 25 percent gain in the mainframe business, while software revenue increased 8.5%.
Analysts however voiced concern during the conference call about the continued disappointment with IBM's global services business - something which will potentially affect future earnings if it is not rectified.

I was curious as to how revenue growth has been in the BRIC countries after IBM reported its business in Japan has recovered from declining revenue earlier this year to being flat this quarter. Below is a summary of BRIC revenue growth over the past four quarters. India is in Green. China in Red showed Significant results.Brazil stayed Positive while Russia declined

Summary of India-USA nuclear deal

noreply@blogger.com (Venu Kumar) — Fri, 17 Nov 2006 22:03:00 +0000

Key points :

On November 17, 2006 the US Senate passed the bill to implement civilian nuclear energy cooperation with India. During July 2005, India and the USA had reached an agreement on the separation of civil and military nuclear plants and technology transfer for civil nuclear plants.

The Indo-US nuke deal brings a reliable source of nuclear technology that can be exploited to set up nuclear power plants in India. This in turn could possibly go a long way in quenching India’s current and projected thirst for power. Needless to say that the companies like BHEL, Larsen & Toubro, KSB Pumps and Honeywell Automation that provide products and services for nuclear power plants would be the primary beneficiaries in this scenario.

India’s power generation today is approximately 15% below the actual consumption. As per the energy and resources institute (TERI) the projected economic growth of 7-8% over the next 20 years will quadruple India’s energy needs.

Coal, the main source of India’s energy needs today, is peaking its exploitation and the gas supply from Iran via a pipeline is unlikely to materialise due to the US opposition.

Hence if India’s power generation has to keep pace with the burgeoning economy, nuclear power has to provide a significant component of it, as opposed to its current contribution of 3%. A very plausible scenario to look at is the building of nuclear power plants with the help of the USA.

Dell Continues to Upset Amidst Positive Expecations

noreply@blogger.com (Venu Kumar) — Fri, 17 Nov 2006 21:38:00 +0000

Dell: Dude, Now You Are Making every one Mad.

Last Night New's that Dell isn't going to release fiscal third quarter results on time, and that the Securities and Exchange Commission (SEC) is now conducting a formal investigation of the company, has left the Street irritated over both the company's ongoing troubles and its relatively sparse explanation for what specific issues the regulators are examining.

While there is growing sentiment that the company has laid the groundwork for better margins, the regulatory woes have pushed the fundamental story out of the picture, at least for the moment.

Laura Conigliaro of Goldman Sachs. She wrote today that she sees the latest announcement "as potentially part of a larger picture involving Dell internal controls, noting that in addition to the "accruals, reserves and other balance sheet items" referred to in an 8-K filed with the SEC on September 11 , "ineffective controls relating to Dell's fundamental business have shown up in the past few quarters in the form of unecessarily aggressive pricing, badly chosen go-to-market strategies, and poor customer service-related decisions."
In Conigliaro's view, the earnings pushouts and formal SEC probe, on top of cancelled analyst meetings and "other execution miscues," will "override any but the most extreme improvements in Dell's fundamental business for the near-term."
She also worries that there is now "a very real possibility" that the situation could lead to management changes and create even more uncertainty around a company "that has already decided to provide less detail and no targets.

"Richard Farmer, an analyst at Merrill Lynch, who has a Neutral rating on the stock, notes that Dell now faces four investigations: the SEC, U.S. Attorney for the Southern District of New York, the board's audit committee, and its own financial and legal teams. Uncertainty around the company, he notes "is increasing."

Shaw Wu, of American Technology Research, theorizes that the issues "could be related to Dell's treatment and accounting of marketing rebates from Intel and its product warranties." He is Neutral on the stock, and worries that "Dell's problems are structural in nature where its cost advantage has been greatly narrowed and its direct model is not ideal is addressing key segments, including consumer and international."
The bottom line is that while fundamentals may be improving, as bulls like, Citigroup's Richard Gardner note, most investors appear too distracted by Dell's other problems to care.

Dell shares today are down 87 cents at $24.88.

Alexa.com Rating OF Most Popular Web Sites

noreply@blogger.com (Venu Kumar) — Fri, 17 Nov 2006 11:26:00 +0000

By categorizing each of the top 100 websites by type and ranking each by its growth in "reach" (defined as percentage of all Internet users who use the particular website, based on data from Alexa) over the past two years (November 2004 through November 2006), Alexa decides what types of websites are growing in popularity and which are not. Here's the result, showing how fast various categories have extended their reach with representative examples of the fastest growing websites in each category:
1. Media Sharing: youtube.com, flickr.com
2. Search: google.com, baidu.com, google.com.br, live.com
3. Blog: blogger.com
4. Utility: megaupload.com, rapidshare.de
5. Social Networking: myspace.com, orkut.com
6. Informational: wikipedia.org, digg.com
7. Software: sourceforge.net
8. Portal: qq.com, yahoo.com.cn
9. Commerce: craigslist.com

Alexa also group the websites geographically to see which regions of the world have the fastest growth. In order of growth in reach (with faster growth higher up the list), the ranking by geographical region, with examples of high growth websites in each category, is:
1. South America/Mexico: google.com.br, google.com.mx
2. Eastern Europe/Russia: google.pl, yandex.ru

3. India: google.co.in

4. U.S./Canada: google.com, youtube.com, wikipedia.org, blogger.com, myspace.com, orkut.com

5. Western Europe: rapidshare.de, google.co.uk, google.de

6. Middle East: google.com.sa

7. Asia: qq.com, baidu.com, yahoo.com.cn

Apple's Keynote software Better than Microsoft Powerpoint

noreply@blogger.com (Venu Kumar) — Thu, 16 Nov 2006 14:33:00 +0000

Over the years, the software has been blamed for boring people senseless. The phrase "Death by PowerPoint" is common corporate parlance. Some companies and conference organizers have prohibited PowerPoint, and the press perennially skewers it as a thought-free plague. One legal scholar, tongue-in-cheek, proposed a constitutional amendment banning its use

Why do I say this? Because I did good number of presentations using PowerPoint and always dreaded the experience of creating the slides. And Keynote removes that dread and makes us look better because it:

* Renders slides for maximum impact. The whole idea behind slides is that they should be visual aids to the presentation, not the presentation itself. With your eyes providing the highest bandwidth path to your brain, those visuals make a huge impression on the audience. PowerPoint slides tend to look pixelated and blocky when blown up to full screen, and the animations tend to stutter or jerk. Keynote slides boast fully anti-aliased typography to remove jaggies, and the animations render smoothly. Most audience members couldn't tell you why Keynote slides look more professional, but they will tell you they like them better.
* Makes it easy to do common things. One of the most common activities for a presenter is to step through a table or graph one element at a time. Yet, because PowerPoint builds its tables in Word and its graphs in Excel, it's nearly impossible to display a table one column at a time or build a graph one element at a time. Both of those functions are built into Keynote because good presenters don't want to overload their audiences with too much information at once.
* Avoids needless clutter. Even when the presenter is creating the slides, PowerPoint tends to clutter the screen with a zillion Office buttons and menubars. And most PowerPoint color themes and templates tend to pull focus to the template, not to the content. Apple's built-in Keynote templates offer minimalist alternatives (such as the black gradient background that has become a hallmark of Steve Jobs keynote speeches) that allow the content to shine. And Keynote has a single menu bar and devotes most of the screen to the slides, encouraging the presenter to focus on making the slide great.
* Helps presenters present well. One of the most important techniques for a presenter is to be able to introduce the next slide before they click to it. Using PowerPoint, that's a technique that requires a second computer and display. Keynote on a Powerbook or Macbook Pro puts your preview slide on your laptop (along with your notes, if you like) while your current slide is up on the screen. Just this one feature allows most presenters to focus more on what they are saying rather than trying to remember what comes next -- and thereby makes them more compelling.

I am not the first people to observe the Keynote effect. Les Posen at Cyberpsych has a terrific blog article titled, Just what is it about Keynote that is changing the way people present? where he cites a number of famous presenters who have been won over to Keynote because it allows them to be more creative. And of course, Al Gore did the visuals for his groundbreaking film, An Inconvenient Truth in Keynote. And Garr Reynolds at the site PresentationZen.com notes how the Zen esthetic embodied in Keynote allows Steve Jobs' presentations to have much more power and impact than similar presentations by Bill Gates.
The bottom line: Good marketing demands good presentations. No professional marketer would publish a print ad in Microsoft Word because the quality would be too poor to be taken seriously, yet the CEOs of their companies continue to do presentations the way they have for the last two decades. If major newspapers are going to bemoan the tragedy of corporate presentations today, perhaps they should start noting that there are alternatives to death by PowerPoint.

Dell Losing PC Market Share - Improving On Margins

noreply@blogger.com (Venu Kumar) — Wed, 15 Nov 2006 21:46:00 +0000

Six months ago, then global PC market share leader Dell, Inc., was taking a beating from Wall Street sell-side analysts for its declining margins and profits. As a result, shares traded for as low as $19 - a five-year low. Since share prices bottomed in July, they are up more than 20%. The reason: Dell is now focusing on profits as opposed to gaining market share. And while the company has fallen out of 1st place in global PC market share - replaced by rival Hewlett-Packard - the company's margins have started climbing again, as has the average price-per-unit of PC sales. Analysts have taken note and several have recently upgraded the stock's rating. Last week, UBS upgraded Dell to "neutral" from the equivalent of a sell rating, and upped its 12-month target price. Goldman Sachs also removed Dell from its list of sell targets and upgraded it to neutral, due to more disciplined product pricing at the company. While some skeptics remain, the overall tide seems to be turning favorably for Dell.

Apple Set To Release iPhone

noreply@blogger.com (Venu Kumar) — Wed, 15 Nov 2006 20:55:00 +0000

Apple has signed with contract manufacturer Hon Hai to make 12 million iPhones next year. Given that this is a product untested in the market (if it's true), it would certainly demonstrate how serious Apple is in attacking the phone market.
One of the rather interesting marketing aspects I've read about is the idea that the iPhone won't be tied to any specific carrier. Instead, it will be sold "unlocked," requiring you to insert a GSM subscriber identity [SIM] card. The downside: Apple won't get any subsidies or special deals from working with the likes of Cingular or T-Mobile. The upside: such an approach opens up most of the world as the target market instead of just the US. This approach would prove that Apple is thinking globally with its next product segment -- and that phone market could bring literally hundreds of millions of new prospects to Apple.