🚀 go-pugleaf

hanc...@bbs.cpcn.com writes:

> On Wednesday, Xerox said that, after 115 years as an independent 
> business, it would combine operations with Fujifilm Holdings of 
> Japan. The deal signaled the end of a company that was once an 
> American corporate powerhouse. “Xerox is the poster child for 
> monopoly technology businesses that cannot make the transition 
> to a new generation of technology,” said David B. Yoffie, a 
> professor at the Harvard Business School. The move offers a 
> stark reminder that no matter how high a company may fly, it 
> is still vulnerable to the next big breakthrough. Xerox joins 
> once formidable tech companies like Kodak and BlackBerry that 
> lost the innovation footrace.
>
> full article at:
> https://www.nytimes.com/2018/01/31/business/dealbook/xerox-fujifilm.html

GE Just Signaled The Next Crisis (And Nobody's Paying Attention)
https://www.zerohedge.com/news/2018-01-30/ge-just-signaled-next-crisis-and-nobodys-paying-attention

Welch would regularly beat Wall Street's earnings estimates by a penny
or two. And he was named manager of the century by Fortune Magazine for
his ability to pump GE's stock.

And while Welch is lauded for his "six sigma" management, it seems his
real talent was using GE's many divisions to move assets around and
goose earnings to hit short-term numbers.

The creative accounting caught up with GE in 2009, when the company paid
$50 million to settle SEC allegations it had used improper accounting
methods to boost numbers in 2002 and 2003.

Among the strategies GE used to make its 2003 numbers was selling
railroad cars to banks, with side deals and verbal promises to assure
the banks they couldn't lose money on the deal.

Enron used the same trick in 1999 when it "sold" Nigerian barges to
Merrill Lynch, allowing the company to fake a $12 million profit.

GE's $31 billion pension nightmare
http://money.cnn.com/2018/01/18/investing/ge-pension-immelt-breakup/index.html?iid=EL

Not only does GE have the largest pension deficit among S&P 500
companies, that deficit is $11 billion worse than the next closest
company, according to Dow Jones S&P Indices. (The $31 billion figure is
from the end of 2016. Fresher numbers haven't been released.)

Age of Greed: The Triumph of Finance and the Decline of America, 1970 to
the Present
http://www.amazon.com/Age-Greed-Triumph-Financ…/…/B004DEPF6I

pg187/loc3667-70: When Welch took over GE in 1980, it was the ninth most
profitable company in the nation. Now it was first, second, or
third. Shareholder value reached $500 billion, more than any other
company in America. The stock price was Welch’s personal measure of
achievement, though he later denied it. The boom of the late 1990s on
balance sent the wrong message to American managers: cut costs rather
than innovate. Despite its appeal, In Search of Excellence had little
true staying power.
pg191/loc3754-60: In 1977, GE Capital, as it was later called, generated
$67 million in revenue with only seven thousand employees, while
appliances that year generated $100 million and required 47,000
workers. He hired better managers and supplied GE Credit with a lot of
capital, and he had built-in scale—meaning large size—due to GE’s assets
size and triple-A credit rating. In time, GE Capital became a
full-fledged bank, financing all kinds of commercial loans, issuing
mortgages and other consumer loans, and becoming a leader in
mortgage-backed securities. By the time Welch left in 2000, GE Capital’s
earnings had grown by some eighty times to well more than $5 billion,
while the number of its employees did not even double. It provided half
of GE’s profits.
pg192/loc3777-79: In a few brief sentences, Welch had defined a new age
for big business. He introduced short-run profit management to GE,
understanding that stock market investors trusted little so well as
rising profits every calendar quarter. It became the best indication of
a company’s quality, making it stand out in good times and bad.
pg199/loc3909-13: GE Capital also enabled GE to manage its quarterly
earnings, engaging in the last couple of weeks of every calendar quarter
in various trades that could push earnings up on the last day or two
before the quarter's end. It was an open secret on Wall Street that this
was how Welch consistently kept quarterly earnings rising for years at a
time. "Though earnings management is a no-no among good governance
types," wrote two CNNMoney financial editors, "the company has never
denied doing it, and GE Capital is the perfect mechanism."
pg200/loc3925-30: The CNNMoney writers got it slightly wrong. GE was not
exactly like the American economy. It was even more dependent on
financial services. In the early 2000s, GE was again riding a financial
wave, the subprime mortgage lending boom; it had even bought a subprime
mortgage broker. GE borrowed still more against equity to exploit the
remarkable opportunities, its triple-A rating giving it a major
competitive advantage. By 2008, the central weakness of the Welch
business strategy, its dependence on financial overspeculation, became
ominously clear. GE's profits plunged during the credit crisis and its
stock price fell by 60 percent. GE Capital, the main source of its
success for twenty-five years, now reported enormous losses
pg200/loc3935-41: He mostly stopped trying to create great new products,
hence the reduction in R&D. He took the heart out of his businesses, he
did not put it in, as he had always hoped to do. What made his strategy
possible, and fully shaped it, was the rising stock market--and the new
ideology that praised free markets even as they failed.