One of our other focuses in the current issue of the Wall Street Transcript is on Computer Hardware. We spoke with analyst Yair Reiner about the current state of this space, given how the economic downturn is taking its toll on much of the technology sector. Mr. Reiner told us that despite the economic downturn, there are a few areas in Computer Hardware that may seem some innovation in the coming year:
For the complete Computer Hardware report, including an full interview with Mr. Reiner, as well as interviews with additional analysts giving an overview of this space, and stock picks, click here.
One of our special focuses in the latest issue of the Wall Street Transcript is on Specialty Pharmaceuticals. We asked several analysts to talk to us about what the economic downturn is going to mean for this space. Louise Chen of Collins Stewart, LLC had this to say:
Ms. Chen: I think what you’re seeing in health care in general is that health care is no longer a defensive space. A lot of healthcare companies in the space that I cover, the spec pharma companies, get a portion of their income from discretionary spending. Allergan (AGN) and Medicis (MRX) have medical aesthetic products, and as a result of the economic downturn, consumers are pulling back on spending for these things. Advanced Medical Optics (EYE), which is being acquired by Abbott (ABT), that company did lasik surgery and that’s thousands of dollars out of pocket. So you’ll see that stock also getting hurt by the economic downturn. That’s a trend that we’re seeing going forward in the spec pharma space.
For the complete Specialty Pharmaceuticals report, including a complete interview with Ms. Chen as well as interviews with analysts covering a variety of aspects of this space, click here.
Japanese automakers continue to show how management is performed. Toyota recently announced a new CEO and now Honda 7267 (Japanese Exchange), Japan’s third largest car manufacturer, has announced a changing of its guard as well. Honda has continued its traditio
n of appointing an engineer to its top job, something American car companies should be considering (particularly General Motors). In a press release, Honda announced that Takanobu Ito, will take over as president and CEO in late June after the company’s annual shareholders’ meeting. He will replace Takeo Fukui who has served as president and CEO since 2003. Fukui has done a tremendous job managing the firm but his age 64 in combination with the current worldwide automobile industry crisis has forced the Japanese to act boldly with regard to its top management. Acccording to the company’s press release,
Ito joined Honda in 1978, and began his career in its automobile research and development operations, principally as an engineer in the area of chassis design…
From April 1998 to March 2000, Ito was stationed in the U.S. as Executive Vice President of Honda R&D Americas, Inc., where he became actively involved in the development of the Acura brand’s first sport-utility vehicle, the MDX…
In June 2000, Ito was appointed to the Board of Directors of Honda Motor, simultaneously gaining promotion to Managing Director of Honda R&D Co., Ltd. (Honda R&D). He subsequently became President and Director of Honda R&D in June 2003. Ito also took on a role in the area of manufacturing as General Manager of Honda’s Suzuka Factory in April 2005.
In April 2007, Ito became Honda Motor’s Chief Operating Officer of Automobile Operations and a Senior Managing Director from June of the same year.
From April 2009, he will again assume the top position of President and Director of Honda R&D, a position he will continue to hold concurrently after the successful appointment as President & CEO of Honda Motor expected in late June 2009.
Honda unlike most automobile companies has managed to remain in the black especially of late but it also finds itself under severe financial pressure and has been making changes to deal with the current circumstances. As pointed out in an article by Hans Greimel of Automotive News Honda faces difficulties,
Honda’s vehicle sales in the United States, its most important market, tumbled 27.9 percent to 71,031 units in January. And its market share slid to 9.4 percent, from 10.8 percent.
Aside from plunging demand, Honda also is fighting a surging yen. The yen’s rise undermines Honda’s international profits and makes Honda’s exports from Japan more expensive.
The Japanese currency traded around 93 per dollar on Monday, not far from a 13-year high near 87 per dollar hit in January. Fukui has called the range unsustainable and has warned Honda may move more operations overseas to counterbalance the foreign exchange hit — including R&D centers.
According to a story by AP reporter Yuri Kageyama in the Charlotte Observer,
Both Fukui and Ito said the change at the helm is a message of its determination to turn a new leaf and press ahead with technological innovations – its longtime strength – to lift its sagging business, and have the momentum to be prepared to take advantage of a recovery, when it comes.
“We are facing hardships that come once in a 100 years,” Ito said.
Ito said he would continue in Fukui’s footsteps in developing ecological and affordable products such as the Insight gas-electric hybrid, which has been a hit since going on sale recently.
“Honda’s strength has been its sensitivity to changing times and ability to respond quickly to customer needs,” he told reporters at the company’s headquarters. “My job is to come up with products that can pave the way for new times.”
The announced changes at Honda also mean a dual role for the new CEO. Ito will not only be the CEO of the firm he will also be the head of the firm’s R&D. As automobile compnaies find themselves forced to reduce their R&D budgets, Honda continues to show how important R&D is to its long term success and survival. American autom
obile manufacturing companies should start learning from the Japanese, even now as they are throttling toward possible bankruptcy. Honda’s new CEO selection while a smart move is no guarantee of success. The automobile industry in general will remain in difficult times for a long period. Honda’s small size while beneficial when making changes rapidly remains a distinct disadvantage in this market when capital and resources are often needed to maintain survival. Ito while engineer at heart has shown a keen understanding of business and the auto marketplace. I expect he will carry on the tradition of his former boss, Fukui, and the company’s founder, Soichiro Honda. Keep a close eye on the business moves Honda takes over the next year. For more: Autoblog Management Today UK AFP Bloggingstocks Bloomberg Wall Street Journal BusinessWeek Dayton Business Journal International Herald Tribune
According to a story by Zachary A. Goldfarb in today’s Washington Post Board of Directors at financial firms might wish to take heed. Taylor reports the new head of the SEC, Mary Schapiro, plans to have the agency investigate whether the boards,
of banks and other financial firms conducted effective oversight leading up to the financial crisis…
… As she examines what went wrong, Schapiro is also considering asking boards to disclose more about directors’ backgrounds and skills, specifically how much they know about managing risk…
We are finally about to see real pressure on boards to perform their duties rather than rubber stamp management’s plans. Time will tell if Schapiro and the SEC can make some real changes specifically with regard to how boards carry out their responsibilities. I think with time the SEC will make some real changes.
Itron, Inc. ITRI (NASDAQ), a global supplier of wireless data acquisition and communication products for electric, gas and water utilities yesterday announced reduced guidance for the first quarter and all of 2009. The company also named a ne
w CEO, Malcolm Unsworth the firm’s current president and chief operating officer. Unsworth will replace LeRoy Nosbaum as CEO on March 31, 2009. Nosbaum will remain executive chairman of the firm until the end of 2009. The executive change at Itron comes at key time for the firm. Itron is at the forefront of smart metering a key issue the new Obama administration is expected to push for 
as it focuses on the improving the nation’s electric grid. While Itron has an opportunity to take advantage of these potential changes the firm along with some of its key competitors have found themselves facing a new competitor that could shake their foundation – Google. Google recently announced it was looking to involve itself in the smart metering business. According to a story by Katie Fehrenbacher in an earth2tech story referring to Google’s entry into the smart metering business,
… Google’s entrance into the space does raise a lot of questions for these firms. First off, will Google be a competitor or a partner?
… Perhaps a bigger question than whether Google is friend or foe is, who owns the relationship with the customer?
… Beyond the issue of customer loyalty, Google’s entrance into smart meter software brings in a heavy-hitter for companies that are looking for Internet Protocol to be the basis of the next-generation smart grid. While some companies are hoping IP will be the dominant standard, many older companies have built networks and technologies on different standards, and even proprietary standards. Incumbent smart meter companies like Itron, Landis+Gyr, Elster and Aclara (part of ESCO Technologies) have already expressed concern over language in the stimulus bill that emphasizes Internet protocol for the smart grid.
Itron’s selection of Unsworth as the new CEO, an insider knowledgeable about the company, the industry an
d the vicissitudes of the industry was a well thought out decision. The company’s board seems to be doing its job. While Itron appears to be facing stiff competition from traditional competitors and now possibly Google, the company continues to have great potential. Unsworth has shown himself to be a very capable executive who has the ability to stand up for the firm and make the right decisions in a difficult market. Keep a close eye on the business decisions and possible changes Unsworth makes as he takes over management of the firm at the end of March. For more: Itron Press Release RTT News Briefing.com
In the midsts of this economic crisis, people are worried about what the future may hold for them. We asked this very question during our portfolio manager interviews here at TWST: what advice do they have for investors for the immediate future? Here’s what our portfolio managers said:
- Jeffrey Auxier, Auxier Asset Management (Long-Term Value Investing)- “I think they should understand the perils of borrowed money and realize that it’s great on the upside, but it can totally take you out on the downside. I think investing requires commitment to voracious research. It’s not looking at quotes on a screen, it’s looking at businesses and being a business analyst. It is looking at businesses in their entirety, asking, what makes a good business? What makes a good management? What’s an enduring business? What business has been around for 50, 100 years? Why is that?”
- Lance Helfert, West Coast Asset Management (entrepreneurial investing)- “I think that investors really need to use their own eyes and not their ears. We’ve seen a lot of scandals in the past six months and if an investor can just use their eyes and say, “I shop at this grocery store” and “I buy this product” and just simplify everything they do and really understand what they buy, I think that’s a good way to go about investing in this environment.”
- Martin Anstee, Stone Asset Management (Dividend Growth & Income)- “In simple terms, if everyone else is just thinking small, you think big. If everybody else is disowning stocks, now is probably the time to be buying them. We cannot promise that we are at the bottom, but we do think the worst is over, although we may have to touch the lows we saw in November 2008 again. If you take a longer-term view, this will turn out to have been an excellent time to buy stocks. Be patient, pick your spots and buy the stocks and put them away. In five years time, you are going to look back and say, “I am glad I bought stocks, that was the right time to do it.”
For the complete Investing Strategies report, including complete interviews with each of these portfolio managers giving a general outlook for 2009, and stock picks, click here.
Marshall Goldsmith, the well-known business author, has an insightful piece in Business Week entitled, Advice for Outgoing CEOs, How can you avoid being a lame duck? You can’t, so make the most of it. The article focuses on one of the most important keys to executive transitions that have so often tripped up outgoing CEOs and their respective companies. According to Goldsmith,
Leaders who are getting ready to slow down and pass the baton often have a common fear: that they will become lame ducks if they announce their successors in advance. No one wants that to happen.
Almost every leader goes through this inner dialogue as part of the challenge of “slowing down.” This fear, which often results in postponing the announcement about succession until the last minute, inhibits what could have been a much smoother transition.
Face it: When you are nearing the time to exit, you will become a lame duck! That is O.K. Eyes will immediately turn to your successor as his or her vision for the company will mean more than yours…
Goldsmith’s advice is so on point. If more top executives would just follow his simple advice more firms would find themselves able to handle CEO transitions far more effectively. Key changes in corporate leadership would in most circumstances be far more effective and less problematic for companies and the executives taking charge.
Sir Andrew Likierman, Professor of Management Practice and dean of London Business School, put together a fascinating piece of research on how business leaders can effectively measure their success. The research entitled, Successful leadership – how would you know? appears on the London Business School’s website. Professor Likierman writes,For those who want to check on their leadership success, for those who appoint leaders and for outsiders (including analysts and competitors) assessing the quality of leadership, checklists of traits are not enough. Nor are comparisons… … What’s needed is how to overcome the measurement problems. So, a number of preliminary steps are necessary to make sure that measurement is robust.
Preliminary step 1: Agree what we’re measuring … note that this is the beginning, not the end of the story…
Preliminary step 2: Focus on outcomes, not inputs … Success is about results, not characteristics.
Preliminary step 3: Make sure the data is as robust as possible…
Once the preliminary steps are taken the Professor recommends you,
Step 1: Set up the framework…
Step 2: Use judgement to interpret…
Step 3: As far as possible, reconcile the needs of different stakeholders…
He concludes,
Successful leadership is about a successful outcome against stated objectives combined with comparisons against a relevant peer group and the way in which opportunities are handled.
Take the time to read this short article, it’s quite prescient, particularly now during such trying financial times.
In our interview this week with portfolio manager Mary Lisanti of AH Lisanti Capital Growth, she pointed out to us several companies that she’s located that are, in fact, benefiting from the global financial crisis and downturn in the markets:
For the complete Investing Strategies report, including the complete interview with Ms. Lisanti as well as interview with portfolio managers from a variety of investment styles and focuses, click here.
Eric Jackson, the activist shareholder, who waged an earlier Internet campaign that helped bring down Yahoo’s former CEO, Terry Sempel, wrote a fascinating piece yesterday on Seeking Alpha. Jackson focused his column on Sidney Finkelstein, the Steven Roth Professor at the Tuck School at Dartmouth College who is considered an expert on what makes for successful top executives. Jackson briefly discussed Finkelstein’s earlier book, Why Smart Executives Fail and his newest book, Think Again: Why Good Leaders Make Bad Decisions and How to Keep It From Happening to You about to be released, and which he co-authored with Jo Whitehead and Andrew Campbell.
Jackson went on in the piece to interview Finkelstein to get his take on the problems we are facing today and why CEOs and their boards have often failed in their responsibilities to shareholders and their respective companies. Check it out, Finkelstein offers a number of enlightening assessments of today’s financial predicament.
