How to have larger profits than revenues?

Porsche Panamera

Just a quick post regarding Porsche CEO, Wiedeking’s amazing feat that allowed Porsche to post a profit of $11.6bn vs total revenues of $10.2bn. How did he achieve this? Well, only 12% came from making cars, the rest came by way of a sophisticated stock deal that may cause Porsche to take-over its parent Volkswagen.

Here is a snippet from the CNN Money article:

Schmidt is referring to a feat that guarantees Wiedeking a place in the record books: Porsche’s profits before taxes of $11.6 billion in the fiscal year ended in July were actually larger than its total revenues from sales of $10.2 billion. Not even Google has profits exceeding 100%. Only 12% of Porsche’s profits came from making cars. The remainder is the fruit of a brilliantly sophisticated stock-hedging strategy (yes, sometimes they do work) that was hatched by CFO Holgar Hrter before Porsche started buying into VW, and ended up panicking short-sellers and enriching the automaker.

Do you know of any other company that has achieved this feat?

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Good on Holiday spending

I picked up another copy of Good while waiting for my coffee at Starbucks. I love the easy to view and understand graphics of the mini-mag. This edition is on the Holiday Economy. Did you know that Americans spent $9.3bn on jewelry, $5.8bn on toys and $19.8bn on computers and video games during Nov/Dec 2007? And get this $26.3bn on gift cards!

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We are living in interesting times

Batman Ride

The current economic roller coaster is not as much fun as the Batman at Six flags. The market gyrations and financial market meltdown is definitely no fun and most of us has not experienced this before. The post-2000 dotcom bust now seems like a walk-in-the-park.I’m sure there are tons of good advice out their. Here are my favorites:Here is John Doerr‘s (Mr VC) top 10 tips, with the HCM Gartner guru, Jim Holincheck sharing his thoughts on the impact on the HCM market (maybe a bit dated), and finally my favorite entrepreneur guy, Guy Kawasaki’s post on the subject from a CEO perspective. This Sequoia capital presentation is very interesting (and potentially depressing) reading.I belong to Vistage, a global organization for CEOs and their top economist, Brian Beaulieu provided sage advise regarding the next 18 months. Here are a few actionable items for business owners:

  • If you have future cash needs. draw down your credit lines and hold the cash.
  • Use CDARS (a network of FDIC insured banks) as a way to protect your cash.
  • Take all necessary actions to maintain a positive cash flow.
  • Retool your management objectives with the understanding that this business cycle has a rise on the other side of the recession. Position your business for the next ascent.
  • Lead with confidence and optimism, with the attitude that “we can beat the business cycle.”
  • Find clients in these resilient sectors: healthcare, food distribution, water purification/distribution, electricity, natural gas distribution, consumer non-durables, education (community colleges in particular) and exports.
  • Expand internationally, and don’t overlook growing markets in Brazil and Chile.
  • Always give your clients a compelling reason to buy from you.
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HCL acquires Axon

If you are in the SAP world then this is big news. Infosys announced on August 25, 2008 that it plans to acquire Axon for US$753MM in cash. A couple of years ago Axon acquired US based PremierHR. A significant inducement fee should prevent Axon from taking a competitive bid. Here is a good analysis of the move by Infosys.Update: HCL ended up acquiring Axon instead of Infosys.Sep 29, 2008: HCL Technologies is offering 650 pence per share or 50 pence per share more than the Infosys bid. Infosys may counter-bid soon and the bidding could go as high as 700-750 pence per share or almost a $1bn.Interesting move…what do you think about it?

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I’m back in the SAP HCM world as a ROC

Update: January 1, 2009 – I’m not with ROC anymore.First off, I apologize for the lengthy silence. I’ve been busy! As of July 1, I’m the CEO of ROC Americas, Inc. and a board member of ROC Global. ROC’s vision is to be THE Global SAP HCM specialist, and after just 7 weeks with ROC I believe that we’ll get there…soon…very soon.ROCSince I’ve joined, the ROC world has grown to include South Africa, France and obviously now the US. ROC is a company with a vision, a world class management team, and the ability to move very quickly. Great stuff!I’ll write more soon…

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The war for talent!

Even with all the news about a slowdown in the US economy and the dark outlook on jobs, it seems that for the most part it is still difficult to find good people. The war for talent is still raging. These SAP sponsored reports by the Economist give an interesting overview of the supply of talent in both the developed world and emerging economies. To quote the Economist report: 

Finding and retaining talent is tough and is going to get tougher. While a global economic slowdown—with its attendant lay-offs—may provide temporary respite in some industries, falling birth-rates, an increasingly demanding workforce and greater competition for talent from emerging-market firms will continue to pile pressure on companies in the developed world. 

Download the Economist reports here.

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