Foreign and Local News – August 2016

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hello everyone,

here’s some interesting articles from widely read online portals known for their well chosen issues regarding current and the future of finance, management and information technology that’s worth reading.  most articles will inform everyone hard lessons experienced by top companies / individuals, be it a success and failure and also help us make better decisiona based on what’s happening from a global perspective.

from bloomberg.com correspondent, Brad Stone :

yahoop

 

What Sank Yahoo? Blame Its Nice Guy Founders

Two Stanford University students put their studies on hold to create what was at one time an essential part of the internet. Then they stopped taking risks.

The epilogue in the long, sad story of Yahoo!, the web portal with the perpetually ebullient exclamation mark, is finally being written. After emerging as the top bidder in a five-month auction, Verizon Communications has agreed to buy the historic web franchise’s core assets for $4.83 billion.

Yahoo Chief Executive Officer Marissa Mayer will assist with the transition until the sale is complete and then depart the company with a comfortable parachute worth more than $50 million in cash and stock. So let’s not weep for her. But inevitably, a passel of eulogies will be crafted about her failed four-year attempt to turn around the company. These reflections will be largely unfair, because the decline and demise of Yahoo isn’t totally her fault. It’s at least partially the fault of its founders, Jerry Yang and David Filo.

The early story of Yahoo is now Silicon Valley mythology. As graduate students at the Stanford School of Engineering in 1994, Yang, a math-oriented Taiwanese immigrant, and Filo, a quiet programmer from Louisiana, created a directory of links called Jerry and David’s Guide to the World Wide Web. It was a handy map to what was then an unnavigable digital landscape, and web surfers loved it. The following year, when Sequoia Capital invested in the newly renamed startup, it brought in a former Motorola executive named Tim Koogle to be CEO.

The move reflected the reigning conventional wisdom of the time—bring in an experienced chief executive and go public early. But while they stepped aside to become “chief Yahoos,” as their business cards said, Filo and Yang stayed intimately involved. Filo, as the technical leader, wrote the very first version of Yahoo search and made the bulk of decisions about the company’s underlying technical architecture. Yang stayed close to strategic decisions and was instrumental after the dot-com crash in replacing Koogle with Terry Semel, the longtime co-CEO of Warner Brothers.

Semel brought with him a core group of native media execs whose names are now familiar in Silicon Valley, like Jeff Weiner, the CEO of LinkedIn, and Dan Rosensweig, CEO of textbook rental service Chegg. This was the origin of what would become Yahoo’s enduring split-personality: Was it a technology company or a media company? Sitting on perhaps the most valuable piece of real estate on the web, shuttling between its offices in Santa Monica, California, and Sunnyvale, Yahoo executives tried to be a little bit of both.

We now know what it takes for technology companies to succeed: fierce, often unpleasant, founders who are able to make hard choices and place unpopular bets. During the years that Yahoo was banking on the media business, Jeff Bezos of Amazon.com, for example, expanded into unprofitable lines of online retail, brooked a painfully hollow stock price, cut workers, and finally spawned a completely different business in the cloud, called Amazon Web Services. At Google, Larry Page and Sergey Brin brought in Eric Schmidt as CEO, but they governed as a triumvirate of equals, inventing an insanely profitable text advertising business that augmented web search results, rather than distracting from them like Yahoo’s eye-ball burning banner ads.

During the 2000s, Yahoo’s biggest mistakes were failures of will. Semel, billed as a “deals guy” from Hollywood, could have bought Google in 2002, as Fred Vogelstein reported in Wired. Yahoo also came close to buying Facebook in 2006, until Semel lowered his offer from $1 billion to $850 million after a disappointing earnings report, alienating an already reluctant Mark Zuckerberg in the process, according to David Kirkpatrick’s book, The Facebook Effect.

These acquisitions probably looked like risky, uneconomical moves that Yahoo investors might hate. That’s the whole point. Web companies need the unique power of founders to do unpopular things. Page advocated for Google to buy the money-losing video sharing site YouTube in 2006; Zuckerberg made what seemed like an outrageously overpriced bet on the photo app Instagram in 2012. This is how tech companies survive—the ability to take risks.

Yang took over as CEO from Semel in 2007 but was either too nice or too unwilling to make hard decisions. In retrospect, he should have fired more employees, and banked hard toward technology and the emerging smartphone revolution. In what now looks like his biggest blunder, he turned away one of the best exits Yahoo would ever see, Microsoft’s unsolicited $45 billion bid in 2008, an effort by then CEO Steve Ballmer to compete with Google.

In what should now be the canonical photo of Yahoo’s decline, from the Allen & Co. conference in Sun Valley, Idaho, that June, Yang was pictured sitting with Page and Brin, his head in his hands, presumably bemoaning the overture from the big, lame software blunderbuss from the north. The photo reveals Yang’s confusion at the time about Yahoo’s true enemy. It was not Ballmer and his gang of Windows fanatics. It was the Google guys, there listening supportively across the table from him.

After that, it was pretty much over for slow-footed Yahoo, trying to navigate a fast-changing internet landscape with uninspired CEOs like Carol Bartz and Scott Thompson at the helm. In periodically leaked missives, executives bemoaned  that Yahoo was spreading itself too thin over too many lackluster products. Without a steadier hand from its founders, Yahoo had lost its way culturally as much as strategically. It was fat with layers of accountants, lawyers, and product managers, people whose job it was to mitigate risk, rather than take it. Yang didn’t respond to requests for comment, and Filo declined to comment through a spokeswoman.

The founders did make big contributions. In 2005, Yang helped orchestrate what would be the company’s best deal: the sale of its businesses in China to Alibaba, along with a $1 billion investment. He deserves tons of credit for that. It’s also likely that his voice was not always heard. In 2012, Yang left the company’s board of directors after its disastrous decision to hire PayPal’s Scott Thompson as CEO and then promptly fire him upon discovering he fibbed on his résumé. For his part, Filo has been the picture of corporate loyalty in an age sorely lacking it. He joined the Yahoo board when Mayer took over the company and, by all accounts, remains an inspirational figure.

Others have chronicled more of Mayer’s mistakes. But now it’s all ancient internet history, to be parceled out and puzzled over by business school students. It’s time for us to mourn Yahoo. Sorry, I mean—Yahoo!

from bloomberg.com correspondent, David Roman :

trump 2prr

 

If Trump Wins, Asia Loses

South Korea, Philippines are most at risk in Asia if trade barriers rise

Investors say there’s a low chance Donald Trump will build a wall on the U.S. border with Mexico if he becomes president. But they think it’s highly likely he’ll slap tariffs on Asian imports, triggering a currency war.

An investor survey conducted earlier this month by Nomura Holdings Inc. flags a long list of worries under a Trump presidency: from a possible rise in trade protectionism to threats to regional security if the U.S. cuts its military commitments in Asia.

The conclusion is clear: after Mexico, Asia is most at risk.

“A Trump presidency would no doubt hurt Asia’s gross domestic product growth and could ultimately drive cost-push inflation, impart smaller trade surpluses and looser macroeconomic policies,” said Rob Subbaraman, the report’s lead author.

In Nomura’s report, titled “Trumping Asia”, 77 percent of respondents in its survey expect the U.S. will brand China a currency manipulator under Trump and 75 percent predict he will impose tariffs on exports from China, South Korea and Japan. Only 37 percent think he will follow through with a pledge to build a wall along the Mexican border.

Nomura didn’t disclose how many respondents it surveyed.

Investors’ fears aren’t unwarranted. Asia is the world’s manufacturing hub and many nations are export-dependent, putting them at risk if trade barriers start rising.

China was the U.S.’s biggest trading partner last year, and if trade restrictions are imposed on the nation, the knock-on effects on the rest of Asia would be substantial, according to Nomura.

None are more vulnerable in Asia than South Korea and the Philippines. South Korea faces a possible backlash from two sides: Trump has criticized a 2012 free-trade agreement with the country, saying it has destroyed almost 100,000 American jobs; and he has vowed to force South Korea to meet the full cost of security guarantees provided by the U.S., which may add to fiscal woes there, Nomura said.

The Philippines faces risks because of possible immigration restrictions. The U.S. is host to 35 percent of the total number of Filipinos working abroad, and Nomura estimates they account for about 31 percent of total worker remittances, a key source of foreign inflows for the local economy.

The Philippines has one of the biggest export exposures to the U.S. in Southeast Asia and Trump’s pledge to bring jobs back to the U.S. may threaten the nation’s burgeoning business process outsourcing sector. The industry caters mostly to U.S. companies and attracts revenue that may equal the size of total worker remittances, about 9 percent of GDP, over the next two years, according to Nomura.

Nomura’s analysis finds the least vulnerable economies include India and Thailand.

While the majority of respondents in the Nomura survey view a Trump victory as unlikely, the threat of protectionism is real.

Trump has already pledged to withdraw the U.S. from the Trans-Pacific Partnership — a free-trade agreement covering 12 countries from Peru to Malaysia and that accounts for 40 percent of the global economy. If TPP is ratified before President Barack Obama leaves office, Trump still has the authority to withdraw the U.S. from the treaty.

Under U.S. law, the president can impose punitive duties, including a 15 percent tariff for a maximum of 150 days without prior Congressional approval in the case where the U.S. has a “large and serious” balance of payments deficit with another nation, such as China.

If China is declared a currency manipulator — a power that resides with the U.S. Treasury without needing the approval of Congress — it could trigger a range of trade restrictions too. Under these conditions of rising trade barriers and reduced foreign investment, Chinese policy makers may seek to weaken the yuan at a faster rate,  according to Nomura.

Trump could well change his policy views in the run-up to the November election and Asian officials are bracing themselves for inconsistent messages until then.

“We are all discovering Donald Trump, as he is himself: there is a stream of consciousness approach to policy pronouncements,” Singapore’s Deputy Prime Minister Tharman Shanmugaratnam said in April. “One can only hope that it evolves towards addressing the strategic interests of the United States in the world.”

from forbes.com thru Hong Kong On Air author Muhammad Cohen : 

jeju sun

 

 

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