Companies in the news
... and how they were assessed
Arconic: poisoned pen
“Call it the business equivalent of an own goal,” said Lindsay Fortado in the FT – or a classic example of Teutonic humour falling flat. The German boss of the US engineering group Arconic has been fired after sending an “ill-advised letter” to one of the world’s most feared hedge fund managers. Klaus Kleinfeld had been fighting a battle against Elliott Management – an activist hedge fund which has long been gunning for his removal on the grounds of underperformance. The precise gist of Kleinfeld’s “bonkers, sarcastic missive” to Elliott’s founder, Paul Singer, is hard to gauge, said Alistair Osborne in The Times. It referred knowingly to the financier’s behaviour at the 2006 World Cup, presenting a “delightful vision” of him “standing in a Berlin fountain intoning Singin’ in the Rain while sporting ‘a native American Indian’s feather headdress’”. But it also made “veiled suggestions” about further indiscretions which, Singer charged, verged on blackmail; the Arconic board sided with him, and Kleinfeld was out on his ear. Elliott Management has become famed for its aggressive tactics, said The Sunday Times. The Wall Street fund is “increasingly turning its gaze to [Europe’s] sleepy boardrooms” – current targets include miner BHP Billiton, Dulux-maker Akzonobel and builder WS Atkins. The ruthless treatment meted out to Kleinfeld will doubtless serve as a warning.
Debenhams: the D-word
It would be too harsh to say that Debenhams’ plan to become a “Destination, Digital and Different” is “Dreadful Drivel”, said Nils Pratley in The Guardian. But one can understand why the department store’s shares fell 5% last week when the new boss, Sergio Bucher, unveiled his grand new strategy. Since almost every other retailer bangs on about “social shopping” and providing customers with great “experiences”, it’s hard to see any feature of the plan that is “genuinely novel”. The only “entirely sensible” idea is Bucher’s plan to boost Debenhams’ beauty business, where it is already a market leader. “Debenhams can’t go back to the good old days, when Amazon was the name of a rainforest,” said Kate Burgess in the FT. But it can’t shake off its past either. The “grim reality” is that “it is tied to leaseholds for the next 20 or so years, many in down-at-heel town centres”. Debenhams would have “a better chance of drawing in families if it flooded store basements to create swimming pools”, and “put a racetrack on the roof”. The “D-word” missing in Bucher’s strategic review is “decline”.
Apple: ticking shelf life
Two years ago, Tim Cook unveiled the Apple Watch – the company’s first new product line under his leadership, and Apple’s “biggest launch since the ipad in 2010”, says Mike Murphy on Quartz. How are things ticking along? The evidence suggests that “consumers still aren’t sold”. Apple has never shared hard numbers on how many “wearables” it is shifting: rather than itemising Watch sales in its quarterly numbers, the device is bundled into its “Other products” division. But although revenue in “Other products” jumped to $2.6bn in the quarter following the Watch’s launch, sales have since been “on a downward trend”, and currently represent just 5% of Apple’s overall revenue. An updated version of the Watch is due in September, but it’s unclear whether it will ultimately make any difference to the product’s “shelf life”.