Dell’s Board of Directors Signals “We Are For Sale” and “Come Save US” $DELL $MSFT

Dell Inc (Nasdaq:DELL) board of directors has long been signalling the market that they are for sale. What was the tell. Look at the composition of board members. The independents number seven members over the age of 65 vs four under the 65 mark.

Nothing against grey hairs. I have a lot of them myself. (they’re all grey while we’re at it) But when you look at the majority of board memberships many are community based, political or national association oriented.

Very little expertise in really growing a company and reaching new heights. The experience profile is “Lets make a Deal”

Kenneth M. Duberstein has a political background going back to Ronald Reagan

Laura C. Conigliaro is a former manager at Goldman Sachs. So it’s all about the wheeling and dealing.

Gerard Johannes Kleisterlee grew up in Phillips and is now Chairman of Vodaphone. Vodaphone is not exactly the leading example of how to do it.

Donald J Carty has a history in aviation which consists in battling fuel costs while trying to leverage capital cost of new aircraft. Lots of wheeling, dealing and card folding.

Klaus S. Luft a former vice chairman of Goldman Sachs Europe. Deal Makers and so on.

Alex J. Mandl, Independent Lead Director had a history at AT&T which relied on its power as an enormous utility. He was the CFO and later the COO and President.

William H Gray an ordained Baptist Minister was a politician and elected to House of Representatives. He is also on board of JP Morgan and cannot say he was against complex derivative strategies.

Thomas W. Luce a retired lawyer, formerly assistant Secretary of Education for Planning, Evaluation and Policy, head of National Math and Science Initiative. So again a political type not a business person builder type.

Last but not least is Ross H. Perot and we all know how the lucky sperm club works.

In short this is not a war-time cabinet. The collective skill set coupled with the collective propensity signals these guys are looking for a way to sell out and not build a business. They will attempt to maximize price on the sale but it still is a sale and not a build.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

 

Google Board Is It Future Ready? What They Really Need is a Geo-Political Godfather $GOOG

Google (Nasdaq:GOOG) reports financial results tomorrow after it made the investors painfully aware that analysts are not very good at accounting.

Is Google’s Board of Directors future ready? Larry Page and Sergei Brin along with Eric Schmidt still have their hands firmly on the steering wheel. They come at from a gladiatorial point of view. Live and die by the sword. Get the better product or service. Make or buy new technologies. Does not matter they have the cash to do both.

So what does the Board do for Google? Most of the independent members are from a technology background. Surely they are not vetting independent R&D decisions. The strategic questions are where do we need to be in the next five to ten years needs to be addressed.

Google while certainly in a cut throat tech environment has been blind sided by regulatory and geo-political issues. The existing board does not have a collective resume in those skill sets or contacts.

Yes Eric Schmidt recently went to North Korea but what about China. Google is still shut out and does not seem to be making any headway.

At this point you can argue that the directors with the technology back grounds are the least useful to Google. What you need is a board that is geo-politically savvy. The ideal candidates would be China and probably World Trade savvy. Henry Kissinger is too old but that stature would be helpful.

The competition would initially be confused by the new board appointments. They also see themselves as gladiators in need of better swords. What Google needs is Field Marshalls with a global coup d’oeil. Dealing with the quarterly demands of sell side analysts focused on rather narrow metrics will not create the drivers of future wealth.

What Google needs on the board are geo-political godfathers. Diplomats, Generals. Perhaps Hillary Clinton will be available.

Dr. Shirley M. Tilghman starts to somewhat come close with her association with Carnegie Endowment for International Peace, and King Abdullah University of Science &
Technology. But as President of Princeton University Google is attempting to corner the intellectual market.

The rest while I’m sure are all excellent people are not bringing the skills or contacts that Google needs. Here is a very quick precis:

Diane Greene [Trustee at Massachusetts Institute of Technology and a Member at Massachusetts Institute of Technology Corp.]

Anne Mather [Independent Director with a huge corporate background]

John LeRoy Hennessy [Lead independent director who is President of Stanford University]

Paul S. Otellini [of Intel and San Fran Symphony]

Ram Kavitark Shriram [Angel Investor, Netscape DNA and helped Amazon]

John Doerr  [Partner at Kleiner Perkins Caufield & Byers LP]

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

What Will Big Labour Destroy Next? Big Government Not the Inaugural Address $SPX $DJIA

The very unfortunate fact about big labour is that eventually any economic entity such as a business fails to exist unless they can shake off big labour. Look at big auto, big steel, major industrials with large unionized work forces have mostly gone bankrupt, lost tremendous shareholder value and often are just ground into the dust.

Unionized blue-collar labour has shrunk to a shadow of its former self as one company after another closed, folded, privatized, sold out, collapsed or just plain disappeared. Everything from Cadillacs to Twinkies were union-made. All of them went through catastrophic declines.

The only place where big labour still exists in a strong vibrant form is with big government. Municipal, State and Federal work forces are overwhelming unionized and squeeze the governments (read tax payers).

The end game must be to evolve past the union model or the result will be economic decline.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

Google Scream Danger Danger Street Really Surprised $GOOG

Google (Nasdaq:GOOG) in a rare move issued a chilling statement that most analysts had it wrong. Google’s real numbers are coming out Tuesday.

It appears that most analysts have not adjusted their estimates to reflect the pending $2.35-billion sale of the Motorola Home business. It is no secret. So whats up with the analysts.

Under US Accounting Rules the business must be shown separately. Most analysts are including the numbers.

So where is the fail. The sale is an announced deal. The accounting rules should be well understood but clearly are not. Management rarely speaks to the street about its earnings. But this time it could see the train wreck coming and felt compelled to yell danger danger.

The sell side analysts as a herd missed the point. So before they stampeded off the cliff management issued a public service announcement warning of the carnage. Management was under no obligation to do so.

The sell side analysts missed the point and shame on them. The conference call will be hilarious as everyone tippy toes around the mass incompetence.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

Gold Germany Conspiracy Theories vs Central Bank Trickery $GLD

Germany announces plans to repatriate much of its gold stored in America and France. New York and Paris to be precise. The cover story is local political issues that can only be solved by moving gold into German Vaults. Bah Humbug.

Germany kept its gold in far away lands because of the then very real threat of Soviet Invasion. This thankfully has become quite improbable.

Here is the probable conspiracy theory with a strong Teutonic flavouring.

Germany is dismayed with the Euro crisis. Germans work hard. Mediterranean countries spend hard. Many Germans feel like they have inadvertently stepped into a pile of doggy doo doo. At the same time they are not impressed with America’s pathetic attempts to deal with government spending and this whole fiscal cliff thing. America went over right. France going left-wing and exporting its money class did not impress as well.

OK so at the end of the exercise Germany dramatically increases its store of Gold held within its borders. They now have more opportunity to be of service for other central banks. They can exchange notional positions of gold. For example they can decide with Beijing that Germany holds on behalf of Beijing and Beijing holds on behalf of Germany say a million oz of gold.

Nothing changes hands physically but you have moved dramatic amounts of wealth which would interest sovereigns with global aspirations. Having moved your gold reserves the sovereign is now in a position to monetize part or all of it for currencies of its choice with partners of choice.

It would be very difficult for Beijing to monetize its gold in America if there are hostilities or just harsh words between the two. But if America and Germany exchange partial positions and then Germany lays off a piece to Beijing with a physical location and currency to be determined you can see the possible leverage.

In the mean time the pesky Greek protestors can riot their hearts out. It will not matter.

Germany has become a little bit more like Switzerland. They will be able to deal more effectively with global forces and ignore political wind storms like the Euro crisis. All this from the grand children of a generation who considered world domination possible.

Goldfinger spins in his grave with glee.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

Efficient Tax Collection #IRS #fiscalcliff Canadian Example

The Canadian federal government just sent a letter to individual tax payers requesting they file electronically only. The use of paper returns by post will be seriously discouraged.

The Canadian government will save tens of millions and speed up tax refunds. Another very cool way to cut government spending. What is the IRS doing to be more efficient?

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski

CBS Spins Out BillBoards. Danger Sign of Really Old Media $CBS

CBS (NYSE:CBS) announced a financial magic trick. They will spin-off part of their global bill board business into a REIT type structure. Payout 90% or more or profits and do not pay taxes. Financial engineering at its best.

Investors will end up with REIT units so what to do? Initially a lot of investors will want to sell and realize cash.

CBS is not selling the crown jewels or the cash cow which pays the bills. They are selling something that they have maximized. CBS is in the business of selling advertising. This medium does not show growth prospects so its a discard for CBS.

Real Estate and Energy lend themselves to REIT style structures. Shopping centers and office buildings have twenty year leases with escalation. Bill boards are rented for short period and are subject to churn.

Lastly look at the technology. Right now you put up an ad manually and replace it next month. New digital offerings will allow you to run multiple ads and control time of day and frequency. Who will pay for the capital cost of this upgrade cycle.

Thanks CBS. I concur with your assessment that billboards no longer fit in with your other assets. But I would be a seller of the new units. Fundamentals are not there.

George Gutowski writes from a caveat emptor perspective. Follow him on twitter@financialskepti or maybe follow his evil twin who is writing a Wall Street Murder Thriller at twitter@georgegutowski