Issues with focus on shareholder value?

Interesting post in the blogging stocks blog awhile back. The article talks about the corporate focus on shareholder value and how it can cause companies to look short term.

My limited opinion is that the sometimes extreme focus on shareholder value and its impact on leadership compensation is a big part of the corporate executive scandals as of late. Also, think about how this goes hand in hand with activist investors who purchase large shares in companies in order to "turn them around"? Perhaps a lot of their tactics really represent ways to inflate shareholder value shorterm in order to get a quick gain but in the end severally degrade the company's profitibility and long term value?

Target is going through this right now with the activist investor William Ackman who purchased around 8% of Target stock right before the market went south. He has since seen his investment devalued over 70%. He is just starting a proxy fight with the board to get representation on it so he can influence Target's strategy.

How do we find the right people for the job?

Just read an interesting article by Malcolm Gladwell titled "Most Likely to Succeed". The crux of the article is about determining who will succeed in a particular role. The article discusses this in terms of NFL quarterbacks, school teachers, and financial advisers and how each go about finding/hiring for each respective position. The issue for each is that what makes for the most successful people in each role are traits and skills that are not easily determined before someone is actually in the role. Think of how Matt Cassell succeeded this year despite never starting a game in college and being a seventh round draft choice.

One interesting thought the article comes up with is that in order to find the best of the best it is more important to increase the potential pool of candidates and put them in situations that would actually imitate what the job would do. For teachers, this would mean lowering standards for them to be certified and instead allowing them more on the job training and evaluating them on that instead. This vastly differs from the common practice of raising standards in order to get more qualified candidates.

I find this applicable at my own workplace in that we should apply some of these learning's to our own internship programs. Make sure that the programs are putting the interns in as many difficult situations that a normal team member would face as possible. Further, the focus for a internship program should be less on managing the intern on a day to day basis and more on constant and consistent evaluation of the traits that an organization feels makes for a successful team member. For Target, this may mean evaluating how they collaborate, navigate the culture, and strive for personal development to name just a few things.

All in all a very intriguing article.

Apple store, watchmen, favorite sites

Latest Apple store trip
Went to the Apple store yesterday to pick up a skin for my iPod touch. Have to say that store still never ceases to amaze me. I haven't been by a Apple store that has ever had less than 10 people in it. I finally realized this time that I saw no check out line or registers, so I was a little confused as I was trying to make my purchase. Up comes a Apple rep who whips out a small handheld and he proceeds to check me out right there next to the Apple accessory's. Woila.

I still am unsure about how the business model for the Apple store actually works. They have a ton of staff in the store at one time so the SG&A cant be cheap and I just cant see them selling a ton of product seeing that their online store is so successful. Ill have to work this one out a little further.

Watchmen
Saw the watchmen yesterday and was relatively pleased. Pros: Film looked great, the fight scenes were pretty sweet especially the opening, majority of the cast was excellent. Cons: Wasnt terribly pleased with the changed ending, movie was plenty long, one key scene from the end of the book was missing, not a huge fan of the Ozymandias casting. I give it 3 out of 4 popcorns.

A quick run down of my favorite sites to check daily
-Engadget - Great blog that runs down the latest in all tech gadgets. Great source for all types of breaking news, reviews, and nerd alert items.
-Blogging Stocks - Daily rundown on all financial and stock related news. Has had a lot of great posts about the economic crisis since this fall. Everyone's favorite shock TV finance jock, Jim Cramer, posts on here.
-Ask MetaFilter - Great site to find answers for any random questions you may (or may not) have. Need to subscribe in order to ask or answer but you can browse free of change.
- Joystiq (for xbox) - site for the latest Xbox news. I check to find out the latest Rock Band music releases
- Slate.com - probably my favorite site to check daily. Great site for news and opinions on world events, politics, finance, entertainment and everything else. Also links to other interesting blogs and sites. Their explainer column is awesome.
-SI.com Hot Clicks - Check it once a day for all that's relevant in the internet world...introduced me to being Rick Rolled

Business on the mind

Thoughts for the day

Shot some emails back and forth with friends about the current state of the economy and the bailouts. Some of my views
-I am very much a free market, capitalist person...with a little a bit of a guiding hand involved. Markets work best when they are left alone to sort things out (survival of the fittest) but rules or incentives need to be put in place to guide business to do the right thing (pollution control, executive pay, protect workers, etc...)
-I hate the idea of the bailout but something must be done to stabilize the economy and the debt markets. How do we do this with out rewarding banks and home buyers for making poor decisions is the question.
-I am very much anti auto bailout. The big 3 have been run piss-poor for quite awhile and we shouldn't be expected to support business that cant figure it out nor should we support bad union contracts.

Microsoft is planning on opening retail stores
-They have tasked the head of the initiative to figure out when and where as first priority. How about how or why?
-I view it as a interesting chance to bring the cool back to Microsoft. Also could be a great way to show off the xbox and other innovative products.
-One problem, it could backfire...badly. Not sure how they could easily bounce back from that

Target Q4 analyst call: I listened in to the Target 4th quarter analyst call. As always its interesting stuff. Doug Scovanner, the CFO of Target, is awesome to listen to. He really knows his stuff and is pretty engaging in person and on the phone. Here is what I gleamed:
-Target is in great shape with its inventory. We shouldnt be seeing tons of markdowns and clearance this spring
-The CEO, Gregg Steinhaffel emphasized that Target will not damage the brand of Target for short run financial gains. That strategy is one of the things I love about Target.
-Look for consolidation in Target's private brands in order to streamline items and drive sales
-2009 will have 60 net new stores. 2010 could range anywhere from 5 new stores to 30 new stores
-Here are some nice indicators of the financial position of the company

• Q4 expenses were lower than Q4 2007 in terms of cash
• A share now is worth $84 dollars in sales compared to 5 years ago when it was worth $40 dollars in sales. Share price 5 years ago was around $40

-Look for Target to continue to focus on changing the consumer perception that Target is more expensive for basics than the 900 lb gorilla.