Opinion

The Great Debate

from Breakingviews:

Rob Cox: GE should put itself up for sale

By Rob Cox
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

General Electric should sell itself. If that sounds like an April Fools’ Day joke, think again. It’s a real proposal on the ballot at the industrial group’s annual meeting. Setting aside the absence of any obvious buyer for the $260 billion company, the proposition illustrates the kind of shareholder democracy gone wild that many boards, and even some regulators, would like to squelch. They have half a point.

The proposal is one of about six that investors put forward and will be up for a vote at GE’s April 23 annual meeting in Chicago. Not all are quite so extreme. One calls for senior executives to hold options for life. Another would end stock awards and bonuses. Naturally, management is opposed to each of them.

But stockholder Robert Fredrich’s proposal that GE “hire an investment bank to explore the sale of the company” is the most financially illogical. For starters, there is no buyer capable of taking such a big gulp, unless Apple, Google or Exxon Mobil suddenly decides to change strategic course.

Moreover, Fredrich offers no evidence for his view that a sale would “release significantly more value.” A breakup of the finance-engines-turbines-refrigerators conglomerate might be worth considering, but not when the market cap of the company is greater than the sum of its parts, as GE contends is the case today.

Inside the Apple and Google smartphone war

This is an excerpt from DOGFIGHT: How Apple and Google Went to War and Started a Revolution by Fred Vogelstein, published in October 2013 by Sarah Crichton Books, an imprint of Farrar, Straus and Giroux, LLC.

By 2010 Apple and Google were attacking each other on every possible front: in the courts, in the media, and in the marketplace. Android’s surge in popularity was astonishing, and Andy Rubin, Eric Schmidt, and the rest of Google made no secret of their glee. It seemed that every chance they got during 2010 they would expound on how many monthly activations Android had racked up and how mobile devices were going to change the future of Google and the world. In an April 2010 interview with the New York Times, Rubin even predicted that Android was going to rule the entire mobile universe.

The year before he had been worried that Google would abandon Android and that he and his team would need to job hunt. Now he confidently proclaimed, “It [Android] is a numbers game. When you have multiple OEM’s [phone manufacturers] building multiple products in multiple product categories, it’s just a matter of time” before Android overtakes other smartphone platforms such as iPhone and BlackBerry.

Apple: ‘Early adopter’ as fashionista

To much fanfare, Apple announced Tuesday that Angela Ahrendts is resigning as chief executive officer of Burberry and joining the inner circle in Cupertino, California. “Apple-polishing” has become the headline du jour. Picturing the soignée Ahrendts surrounded by geeks in jeans and hoodies, we might be forgiven for wondering why Apple feels in need of a fashionista buff-up. After all, there is hardly a product line more shiny-bright than Apple’s — or one with less affinity to the cold exclusivity of the world’s great fashion houses.

But the extraordinary affection that iPhones inspire is different from the anxious ostentation surrounding high fashion.

However sublime couture may be, it is neither lovable nor practical. Nor does using it feel like participating in a major human advance. There is something wondrous about Apple products in the ease and pleasure they afford their users, connecting us in unprecedented ways to other people, to our surroundings and to the world of ideas.

from The Great Debate UK:

Apple attempts to become fashionable

The UK lost one of only three female CEOs on the FTSE 100 on Tuesday, as Burberry CEO Angela Ahrendts quit. My concerns about females at the top aside, the interesting thing about Apple’s new hire is the link between Apple and fashion and what it tells us about the evolution of the tech industry.

Ahrendts is a smart choice to become the head of retail and online stores for Apple. Firstly, her marketing skills are second to none. During her tenure at Burberry she has completely transformed the consumer experience at the iconic British brand. The stores are beautiful. The central London branches are styled just as well as the brand's catwalk stars; they look more like a high-end boutique hotel in Paris or Milan than a high street shop.

The last time I was in the flagship London store there was a life-size virtual catwalk show going on and what looked like a sculpture wall was actually a collection of accessories, all for sale. The music was pumping, the shop assistants were friendly, helpful and of course draped in the brand and, crucially, the place oozed cool. Ahrendts managed to take a British brand that was once considered the staple of the “chav” and make it covetable once again.

What does Apple really owe taxpayers? A lot, actually.

Even as Apple sizzles in the Senate hot seat for alleged tax evasion and finds itself the object of a Justice Department investigation into price-fixing e-books, the company still enjoys a vast reservoir of good faith with the American people. But if Apple doesn’t reexamine its relationship to those who made its success possible, that well could one day run dry.

Apple is not unique in its attraction to the game of monopoly and tax dodging, but it sure is creative. The firm has helped to pioneer the exploitation of loopholes and the setting up of subsidiaries where profits are stashed offshore through a fantastically complex maneuver known as the “Double Irish with a Dutch Sandwich” which seems to involve, among other things, a mysterious Irish company with no employees. The upshot? Apple pays only 2 percent of its $74 billion in overseas income in taxes. According to Senator Carl Levin, that translates to ducking $1 million an hour.  Surely Apple qualifies for the tax avoidance Olympics.

During a recent Senate hearing, CEO Tim Cook spun Apple’s tax stance as a model of corporate stewardship, explaining that the firm had a duty to shareholders to pay as little as possible. Many senators agreed, including Rand Paul, who offered that the committee should “apologize” for forcing Apple to sit through a “show trial” concerning “a bizarre and Byzantine tax code.”

The dark side of shareholder activism

Shareholder activism sounds so respectable, even noble. The phrase conjures images of good-corporate-governance folk fighting greedy or dysfunctional management in the company’s best interest. While shareholders can be disciplinarians who right the wrongs of abusive directors, many boardroom activists advance some of the most destructive short-term thinking in business today.

Sparring with management is popular sport for short-termists seeking to maximize the value of their assets. The game ranges from venal to honorable. “Don’t let the Elliott Hedge Fund pursue its self-serving short-term agenda and destroy the long term [sic] value of your investment,” Hess Chief Executive Officer John Hess wrote in a letter to shareholders last week. T-Mobile CEO John Legere blamed “greedy hedge funds” after proxy advisors to MetroPCS investors advised shareholders to block a merger with the wireless giant. In February 2012, Apple’s board agreed to majority voting, a once-fringe officer election process that can have unintended consequences and has become more common at large-cap firms. Coincidentally or not, since the resolution was adopted, Apple announced that it will distribute $45 billion in dividends from its $137-plus billion in cash reserves.

In a way, it makes sense that shareholders have become so active in corporate gamesmanship. Tussles between directors and equity holders have traditionally favored internal stakeholders; legal protections for shareholders are relatively weak. Aside from voting out management, alleging a breach in duty of care is virtually the only legal standard for holding officers accountable for wrongdoing. An alternative is litigation, and the number of securities class actions has fallen, though settlements reached $2.9 billion in 2012, around double the $1.45 billion awarded in 2011, according to a report by Cornerstone Research and Stanford Law School professor Robert Daines.

Apple and Samsung’s cone of silence

Apple and Samsung, you might have heard, have spent the last many months in a California courtroom haggling over who violated whose patents. At the end of August, Apple was awarded more than a billion dollars in damages by a jury, and the Samsung is now claiming jury misconduct. Just last week a U.S. appeals court threw out the judge’s ban on Samsung’s Galaxy Nexus phone. The whole situation is, really, turning into a bit of a confusing mess.

Also messy: a lesser-known but hugely important struggle among Samsung, Apple, and those members of the press trying to write about the court battle. While otherwise adversaries, the two companies have joined forces to keep some of the evidence in the case off the public record. But how much secrecy in the Apple v. Samsung proceedings is too much for the public to tolerate? It’s a meta legal question, and one that might not have the same billions directly at stake as the main event. But the outcome of the dispute about the transparency of our courts is central to understanding the future of these big tech trials. And there will likely be plenty more of those.

The question at stake is whether the tech firms will be allowed to tie up the courts with their business disputes while engineering it so they don’t face the full scrutiny of a truly public trial.

from Paul Smalera:

Paradise regained: Clayton Christensen and the path to salvation

Is it possible in the year of our Lord 2012 that leadership still isn't well understood? In 2012, despite business journalism’s fetishization of Steve Jobs, the most successful leader ever, whose apotheosis was Walter Isaacson’s doorstop, Steve Jobs, a biography of the half-Syrian, bearded man who built the world’s most valuable company, brick by brick, and found himself, like an earlier CEO of sorts, with legions of devoted apostles, some powerful enemies, and an inextinguishable legend? Is it possible, despite the endless streams of management self-help articles burbling out of Fast Company, Inc., Harvard Business Review, Businessweek, Fortune and the blogs of droves of self-appointed leadership gurus, we need more advice? And is it possible despite the emails – so many emails, Jesus wept – those emails that aggregate all this content using algorithms and intern labor, and slice it up so that the middle manager in Minnesota and the lawyer in Los Angeles and the new media marketer in New York are all .0058% more likely to click through to a relevant article? Is it possible, really possible, the answer to our prayers is another book on leadership?

It is, thinks Clay Christensen. Business folks – the unquenchable consumers of all that content – have been taking the paradoxes of leadership, because they are so familiar, for granted. When they do this, they ruin their companies and then they ruin their lives. Like that subway step everyone tripped over for years without noticing, they take for granted that the well-worn grooves on our society’s pathways are the right ones to be in. They don’t watch the road to see when a turn they are on is about to become rutted, or when they might hit mud and tip over. They feel, like the pioneers, safe in a wagon train, but then something goes wrong, and they are very alone, very fast. They need the wisdom of a pioneer who has crossed the valley, and studied the path.

    Paradox one: Leading is usually about getting people to go someplace difficult and new, even if (or precisely because) they’re perfectly comfortable and prosperous where they are right now. Paradox two: A leader can’t just motivate people to change, she has to persuade them to actually take the journey, and care about its success or failure. Paradox three: Even if a leader succeeds, there’s no guarantee she will get any credit, or gratitude for the services rendered. Except for the millions of dollars in compensation some business leaders make, the magazine cover stories and books written about them, the hobnobbing with President Obama, being a leader can be the most thankless of tasks. Of course, if you do it wrong, you get shown the door.

Still. Celebrity, money, power – hard to shed a tear, it’s true. But pay attention, for a moment, before we get to the personal, to the failures of business leadership. The landscape is littered with the carrion of companies that blew it; high fliers that flamed out. If leadership can be occasionally rewarding, it is far more often the case that business leaders, even ones who have been coronated by adoring customers and media, end up, over the long haul, stumbling and failing. To put it in more fruitful terms: For every Apple, there is a Blackberry.

Mike Daisey and our attention embellishment disorder

Last night at Georgetown University, I stood up and applauded Mike Daisey after he was done speaking about why he lied. As a journalist, you are not supposed to stand up and applaud the people you’re covering, especially people who just admitted to lying about key details about workers they had (or hadn’t) met in China. However, Daisey hit on a fundamental truth about labor journalism in last night’s talk at Georgetown. He claimed he stretched the truth about his visit to a Foxconn factory in China as part of his play The Agony and the Ecstasy of Steve Jobs (which later became This Americans Life’s most downloaded episode) to dramatize a story of labor abuse that had largely been ignored. As a labor reporter who has often seen stories I have written about brutal working conditions ignored, I sympathized with Daisey and his broader critique of the problems of labor journalism.

By embellishing, Daisey did what an activist — not a journalist — does. He got too emotional in his pursuit of trying to take on a big corporation, so he stretched the truth. This doesn’t make it right, but it does make it more effective. And so it forces us to ask very deep questions about the level of sensationalism required beyond the standard mistreatment of workers to get the media to finally pay attention to labor stories.

Covering strikes and lockouts, I have seen workers do the same thing: stretch the truth because they wanted to get at the company.

from MediaFile:

A new iPad, the same iEthics

Several days after the launch of the new iPad 3, HD, or whatever it’s called, we all know about it’s blazing 4G capabilities, including its ability to be a hotspot, carrier permitting, of course. We know about its Retina display, which makes the painful, insufferable scourge of image pixelization a thing of the past. We know about Infinity Blade. We know that to pack all this in, Apple’s designers had to let out the new iPad’s aluminum waist to accommodate some unfortunate but really quite microscopic weight gain. We know the iPad’s battery life is still amazing, and its price point is altogether unchanged. We know Apple has adopted a cunning new strategy of putting the previous-generation iPad, as it did with the iPhone 4, on a sort of permanent sale, to scoop up the low end of the high-end market. (We wonder if this was Steve Jobs’s last decree or Tim Cook’s first.) We know a lot about the iPad.

But what we don’t know: How many of Foxconn’s nearly 100,000 employees will harm themselves, intentionally or inadvertently -- or their families or loved ones -- in the manufacture of it? And will the developed world ever acknowledge the dark side of these truly transformative technologies, like the iPad, or will we continue to tell ourselves fables to explain away the havoc our addictions wreak on the developing world? Is a device really magic if to pull a rabbit out of a hat, you have to kill a disappearing dove?

Those of us who have been technology journalists have long been subjected to the cult of Steve Jobs’s Apple, and those of us who are fans of technology are mostly well aware of the stark elegance and extreme usability -- even the words seem inadequate -- that come with using, let alone experiencing, Apple products. But the rumblings about Apple’s manufacturing processes started years ago, and the recent New York Times series on the ignobility of Foxconn as an employer blew a hole in the side of that particular ship of willful ignorance. Few Apple consumers can claim not to understand the human sacrifice behind their glowing screens -- the death, diseases, exhaustion, mental and emotional stress, and superhuman expectations placed upon the workers who bring these magic devices to life. It’s not just in the papers -- Mike Daisey’s This American Life podcast exposé on Foxconn and Apple is a mere click away, and most mainstream media have given at least passing coverage to the working conditions reflected in the Gorilla Glass on our devices.

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