Tuesday, June 06, 2006

Snippets, Snipes & Snides
1 June - 6 June 2006

The Goldman Sachs Factor
We have Paulson being appointed by Bush. Don't forget about Robert Rubin a few years back, also from Goldman Sachs. Forget Da Vinci Code. If you want to get to grips with a real conspiracy, take a look at all the Goldman Sachs staffers taking over important economic positions around the world. The U.S. Treasury, the Bank of Italy and the Bank of England have all recently poached key policy makers from the world's most profitable securities firm. While no one would dispute that New York-based Goldman Sachs is a money-making machine full of alpha-brains, it isn't healthy for so many decision-makers to be drawn from one source. U.S. President George W. Bush has just appointed Goldman Sachs Chief Executive Officer Henry Paulson as his new Treasury secretary, one of the most powerful economic jobs in the world. In January, Goldman Sachs Managing Director Mario Draghi became the new governor of the Bank of Italy. In Britain, David Walton, who was chief European economist for Goldman in London, last year joined the Bank of England's Monetary Policy Committee, which sets U.K. interest rates. In Canada, Mark Carney, formerly managing director in Goldman's Toronto office, is now a senior official in that country's Finance Ministry. It's not just economic jobs, either. Gavyn Davies went from Goldman to become chairman of the British Broadcasting Corp. for a few years. When someone was needed to run London's preparations for the 2012 Olympics, where did they turn? Goldman of course. Paul Deighton, a chief operating officer at the securities firm, was appointed in December. So, the danger is a very powerful "old boys network" is being formed across Europe-US. It could have benefits but the risks are also there for the leverage to be mis-used and abused.

Lion Forest & Lion Industries
The deal has been announced and it was unfortunate that it coincided with a big fall from Wall Street. That does not account for the big fall in both counters. Companies need to wise up on the need to communicate more effectively. The terms of the deal mirrors the announcement to the exchange, nothing more was added. Management have to realise the importance of good PR. The deal provides a lot of cash - what you are going to do with the cash will provide good information for investors. Coming out to say they are looking for good investments only make people think that Lion group will dump money back to the staving Silverstone and steel operations - both highly unattractive to investors. Plus more should be communicated on Lion Forest where they will have to cough up a certain sum to pay back the loan, and how Lion Forest minority shareholders will get a similar cash back. The bigger danger lies in Lion Industries, there is no covenant to force the company to issue a special dividend back to shareholders, Lion Industries can do what they want with the funds, chances are they will keep it in their various capital-intensive investments or the new Kimtrans. There should have been a more clearly laid out plan together with the announcement of the deal on what they planned to do with the funds (knowing full well that investors will fear the worst if they just say "looking for new investments"), shouldn't the companies have planned a bit better to assuage the fears of investors... or they just couldn't care less.

Google To Get Into Spreadsheets
Excel, probably the most important item bundled by Microsoft, will be challenged by Google' new offering. Google will introduce a spreadsheet program, continuing the internet search leader's expansion into territory long dominated by Microsoft. The big thing is that the spreadsheet will be "online". Consumers and businesses basically will get a free alternative to Microsoft's Excel application - a product typically sold as part of the Office software suite that has been a steady moneymaker for years. To avoid swamping the company's computers, Google's spreadsheet initially will be distributed to a limited audience. Google's spreadsheet isn't as sophisticated as Excel. For instance, the Google spreadsheet won't create charts or provide a menu of controls that can be summoned by clicking on a computer mouse's right-hand button. The program's main goal is to make it easier for family, friends or co-workers to gain access to the same spreadsheet from different computers at different times, enabling a group of authorised users to add and edit data without having to email attachments back and forth. That's where Google attempt this time will fail miserably - the indispensability of Excel is its all-encompassing ability to contain the simple stuff to the mind blowing multi-layered figures. The options to convert into charts and tables are so important as its the basis for a powerful presentation on PowerPoint. Google's offering comes nowhere near that - I predict that Google will get eggs on their face this time but they will be back to challenge Excel again later. You have to challenge Excel if you want to dismantle Microsoft's monopoly. But not this time Google, not yet. The one big asset of Google is offering the spreadsheet online and allowing multiusers across various locations to edit, update the spreadsheet. Now Google has to incorporate the other strong points of Excel, and it will be a mind blowing product. Although distributing software over the internet gives more people greater access to programs, the approach requires trusting a custodian like Google to save and protect the information from unauthorized users. That's a leap many security-conscious companies are unwilling to make and something consumers may be reluctant to do amid rising concerns of government snooping. The spreadsheet represents Google's latest software application to be tethered to an internet connection instead of a single computer's hard drive. Google acquired an online word processing application called Writely in March and rolled out a calendar service a few weeks later. All of those free programs pose a possible threat to Microsoft, which established itself as the world's largest software maker by selling its Windows operating system and complementary applications that run on the platform.

1 comment:

Moola said...

Hey Sal,

There's a write-up by Rib Kirby on them Goldman boys on FSO:

http://www.financialsense.com/Market/daily/monday.htm

cheers!