Wednesday, October 10, 2012

All's fair in love and war!

The momentum has been set, now Rwanda & Congo must sustain it

Laurent Nkunda, who heads Congo's most powerful Tutsi rebel faction, was last week arrested in neighbouring Rwanda – which for years has supported his ruthless anti-Hutu insurgency in the region. Speculation is rife that Nkunda's arrest could be part of a Rwandan tradeoff with Congo. Some senior UN officials believe Congo might now be persuaded to go after Rwandan Hutu rebels. The arrest of Nkunda, on the other hand, means Rwanda is finally ready to abandon him and embrace the splinter faction of his movement, the National Congress for the Defence of the People (CNDP).

Nkunda on his part had displaced more than 250,000 people in eastern Congo in 2004. The humanitarian crisis and global outrage this provoked had forced both the Congolese and Rwandan governments to meet across the table.


Source : IIPM Editorial, 2012.

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Monday, October 08, 2012

Ownership through paper (shares) has always been and will always remain the biggest illusion of ownership. Real ownership comes through sweat and hard work and never diminishes in value!!!

Faces that define ‘real’ entrepreneurship!

As I sit down to write this editorial [Ed note: as on November 9, 2008], the selling pressure in the markets have been so intense today that the Sensex broke the 8,000-mark and slumped to a low of 7,697 – down a whopping 63.7% (13,510 points) from its all-time peak of 21,207, touched on January 10, 2008. I remember having written the last time on the same subject for the February 3, 2008 issue – when the markets had fallen to around 15,000 – in an edit titled, “If you can, invest to become an entrepreneur instead of investing in stock markets!!!” As the index falls to almost half of what it was then, there is nothing more important that I feel like sharing again with my readers.

Readers of our publications know that over the last few months, I’ve constantly been focussing on the impending global crisis, the sub-prime crisis and the failure of the banking system in the USA. In that edit then, I remember having written about the huge losses that Morgan Stanley and Merrill Lynch had been facing and how the entire American system was on the brink of a disaster. Then again, I hope all our readers would agree that we were the first to write on the entire crisis; and on how to save capitalism. And to keep our leadership in trying to impart the right knowledge to our readers – that can also immediately impact and benefit them – this time again I want to share my views on investing in stock markets with the readers. Just in case you think that I myself may not be doing what I preach, let me tell you that in my entire life, neither have I, nor has my father, mother or wife, invested even one rupee in the share markets. Well, this despite having majored in finance during my business management studies and having topped in the Investment Analysis and Portfolio Management paper with an 80 plus score under a professor who was the strictest in town! Also, this despite having some very close friends who were stock market fanatics and doing very well in the financial sector themselves!

And this has been so because after properly studying and analysing all possible portfolio investment models, the only conclusion I could come to as a very keen student of management (who has always believed that there is nothing more practical than a good theory) was that “all the theories that suggested that the most ultimate way to make money in stock markets, were utter garbage.” There is no way that one can draw a regression line and show that because over the last 20 years, people have made money in the stock markets like this, therefore they can do the same in the future too. The last time the Nobel Prize was given to two economists for their portfolio investment model, one saw the US government having had to bail out the venture of these very economists just one year down the road! That, indeed, is the one and only truth about share market investments. So why should the share markets exist at all? And if so, who should invest in it and who will make money from there?

Well, the answers are complicated. I wonder often: do we need a share market at all in the first place? I have always had a personal objection to the paper ownership of others’ sweat and toil. That’s why the worker feels so alienated from what he does in a modern-day large corporation, while someone who contributes nothing to the organisation’s production process reaps the profits on the basis of capital power. But then, entrepreneurs need money to create production and in turn jobs and growth, don’t they? But entrepreneurship also means responsibility and accountability; and if entrepreneurship is responsible, then shouldn’t entrepreneurs be answerable about the money that they take from others?

And if they are to be responsible, why shouldn’t they take the money as debt from banks or owners of capital where the entrepreneurs know that they are obliged to give regular returns – unlike on equity? Well, I am sure at least Fidel Castro, for one, must have had similar thoughts – for when he took over the reigns of Cuba, he did convert the stock exchange building into a hospital... for masses need hospitals, education and employment first, before they are encouraged to gamble their money away on stocks! But then, let’s not get so extreme! The share market is one of the lifelines of the (inhuman) capitalist system, which unfortunately appeals most to the selfish human personality and psyche. And since I am all for democracy and freedom of choice, I would keep my loud thinking to myself – though that’s exactly the reason we haven’t yet gone public. As an organisation, we believe in being responsible spenders. Thus, we will go to the market the day we know we will be able to do so much productive work with the money generated that we will give the right returns to our investors.


Source : IIPM Editorial, 2012.

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Saturday, October 06, 2012

FOREIGN POLICY: BURMA

Obama Wishes India to Interfere in Burma... Burma Who?

The only reason that could motivate India to interfere in a clearly army dominated nation is the presence and support of China that the Burmese regime enjoys persistently. But then again, should India be cribbing to interfere anywhere and everywhere that Chinese presence exists (China even endorsed Burma’s November elections)? Clearly, the answer is no; and Obama very well knew that before too.

Then what exactly prompted him to bring out an utterly trivial Burma issue? The only reason due to which we guess Obama might have mentioned Burma in his speech was because he had been given more time than he had planned for. The choice to fill up time, ergo, would have been between discussing Chicago White Sox, his favourite baseball team, and Burma. Thankfully, he chose Burma...


Source : IIPM Editorial, 2012.

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Friday, October 05, 2012

HOW POLICYMAKERS ARE DESTROYING THE GREAT INDIAN TELECOM DREAM

Bloodied by Market Losses in the Smartphone Category and Hit by Scathing Critique on its latest N8 Launch, Nokia’s Leadership Position is under Serious threat. Given its Reticent Posture, The Worst could come This Year. 

Nokia still commands 84% of the market share in the price band of below Rs.2000. This price band fulfils the need of those looking for handset for voice and text messages. Nokia brand value works on this front. However, when it comes to the price band of Rs.3000-4000, where the mass market exists, Nokia’s market share stood at just 23% for the quarter ending March 2010 (IDC). The segment is dominated by the Indian branded handsets, which offer several options to the customers in the band. Players like Mircomax, Karbonn, Lemon and Lava command market shares ranging from 1 to 13%. For a long time, the handset giant has been missing being the first as per industry benchmarks and has become a laggard follower in more cases than one. Nokia’s Express Music series, for example, came only after the success of Sony Ericsson Walkman series. Again, the touch screen phones of Nokia came much after the immense success of the iPhone.

Even globally, Nokia’s branded value and market share have been falling at a similar pace. The Helsinki-based company, which accounted for 1/3rd of the market capitalization of Helsinki Stock Exchange till 2007, has been involved in a patent dispute with Apple. In 2009, Nokia filled a case against Apple in the US citing that the latter has infringed on 10 of its patents. Apple, in return, has filed a case accusing Nokia of 11 patent infringements. At a point during the dispute, Nokia asked the court of law in the US to stop imports of all the Apple products including iPhones, Mac and the iPod. The allegations and counter allegations couldn’t do anything to Apple, which continued to rock with its products, while Nokia’s performance became disappointing.

As per Gartner, in the third quarter of calendar year 2010, Nokia sold 110.4 million units. Its volume sales were slightly lower than expected due to shortages of components, such as camera modules and displays, which restricted availability of lower cost devices. Demand for lower end products was met through some destocking in inventory volume that helped Nokia take its sell through volume to 117.5 million units. This resulted in a market share decline of 8.5% yoy.

The company is trying to ride the growth engine of smart phones and has launched N8 in the global market. But in the segment, Nokia’s performance has been dismal. N8 has features like the 12 MegaPixel camera, but Nokia’s software and Ovi services still do not make a mark in the eyes of the seasoned smartphone user. A lot of work has to be done on the software front, where Nokia has been found wanting globally. Is this the end of the road for Nokia? While that may not be, but the September 2010 JD Power and Associates Smartphone Customer Satisfaction Survey placed Apple at number one, and Nokia at the last position. Amusingly, even the moribund Palm got a better ranking than Nokia. Clearly, something’s going horribly wrong in the Nokia camp, and the faster they wake up to this new reality, the better for them.


Source : IIPM Editorial, 2012.
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Monday, September 10, 2012

Another breach into the dragon’s lair?

Mobile handset production in India has seriously lagged the Telecom Services Revolution. Current trends provide an opportunity to rectify this anomaly. Can India take it up when it matters?

Post liberalisation, the grand telecom story has been a flagship of India’s corporate prowess, and has developed business models that are benchmarks for players across the world. However the flip side of the story is that while players, both Indian and international, have lined up in good numbers for the telecom services space, a similar exuberance wasn’t visible in the telecom handset manufacturing space in the initial years.

Slowly but surely, the MNCs that saw India as a market also started seeing its potential as a manufacturing hub. LG has manufacturing facilities for handsets near New Delhi and on the outskirts of Pune. It is further planning now to set up a facility in South India to exporting handsets from here to European and CIS countries. Its Korean counterpart Samsung also manufactures mobile phones at its facility in Chennai. Market leader Nokia set up its plant at Sriperambadur, Chennai with a manufacturing capacity of 5,00,000 units per day. The Indian Cellular Association (ICA) came out with a report titled ‘Enabling the mobile handset and component manufacturing value chain in India’ in 2005, where it had mentioned that indigenous design and manufacturing would help companies achieve higher localisation.

Considering the present scenario, the field is expected to split wide open now with the right impetus. India has become the world’s second largest mobile handset market with handset sales expected to reach 140 million units in 2010 and grow to 206 million units in 2014, a CAGR of 20% (Gartner). Trends could soon change, considering the thrust being provided by the emerging domestic players who have eaten up a substantial market share from established international players in a short time. As was reported by IDC some time back, market leader Nokia saw its market share drop alarmingly to 36.3% in 2009 compared to 54% in the previous year due to players like Micromax, Spice, Lava, Karbonn and G’Five (read related story on G’Five in this issue of B&E).
 

Source : IIPM Editorial, 2012.
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