Interesting article in The Economist.
www.economist.com/business/displayStory.cfm?Story_ID=886260
Some choice quotes:
"In general, telecoms companies feature prominently among
the biggest wealth destroyers."
With a little more work, they could dominate that category. ;-)
"Another winner?and a glaring exception to the dismal record
of telecoms firms?is NTT DoCoMo, Japan's only entry in the
top ten. Its high placing is largely thanks to the Japanese
government, which gave the firm its 3G licences free. "
"Glaring exception"--I like that. Suggested motto: "DoCoMo--
the power of glaring." ("When those Waseda grads broached
the subject of having a spectrum auction, I stared 'em down.")
DoCoMo is an exception in another way:
"Unsurprisingly, Japanese companies performed dismally. In most
large Japanese businesses, the notion that capital has a cost at
all is still new. Cross-shareholdings have ensured that capital was
allocated with extraordinary inefficiency."
I call this, "stuck in the mochi." I.e., Japan's rice-gluten-jammed
corporate culture.
And a bit of a shock about another Japan mobile player:
"An investor who has held shares in Britain's Vodafone ever since
June 1996, for example, has chalked up a 248% [Total Stockholder
Return]. But Stern Stewart's methodology, which takes into account
those who bought during the period as well as those who held
throughout, produces a startlingly different result. It reckons that
overall Vodafone destroyed some $145 billion between 1996 and
2001, more than any other company in the study. Most of that
value was lost as Vodafone bid dearly for third-generation (3G)
mobile-phone licences and paid a hefty price for Mannesmann, a
German group. Vodafone's loss was Mannesmann's gain; the German
company ranks as the world's third-biggest wealth creator over
the same period, with $121 billion of gains to its credit. This seems
to confirm Warren Buffett's observation that shareholders of target
companies are the only winners in mergers."
The valuation formula suggested here can, perhaps, be
applied to casinos, if you count gambling tokens as stock.
-michael turner
leap@gol.com
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Received on Thu Dec 6 06:44:38 2001