Posts by The Godfather 606 publicly visible posts • joined 7 Oct 2011
Michael Dell is a shrewd cookie and the Microsoft involvement appears to be a loan, ergo not direct equity or ownership. He knows what he's doing and has in my view held the upper hand in all events and will continue to drive his vision for Dell and not that of others.
Microsoft is not into his bed but on the floor at the foot of his bed, desperately clinging to his sheets....
Let's face it, it's a bloody sight cheaper to pick off their clients than to buy chunks of the business at inflated values to lessen the loss to banks and investors. Daisy, although listed is quite similar in structure and funding to 2e2 (although its debt is half that of 2e2).
It's sensibly servicing markets where PC's still show growth and is skillfully nicking business where it isn't, ergo from Dell, HP and others. Nothing wrong in this tack but don't for one minute think Lenovo will stick to this tram-line. They're big enough and astute enough to go for where the growth now is. when they have exhausted current growth potential.
This may prove tricky and will depend on the contractual documents applicable. Usually, they will always include a clause that renders contracts null and void on any insolvency process of a supplier or customer.
2e2 customers are however are legally obliged to pay debts for services already rendered and delivered.
This is going to HURT but it has been on the cards for some time and accentuated more recently. This is a monumental failure in the channel and will hurt suppliers considerably given the lack of credit insurance cover and the volumes traded by 2E2. Cover had not been available on the Group for at least the last four years or so. This is a group that accelerated acquisition in its early days and probably swallowed too big a fish in Morse. The resultant debt pile was never likely to be serviced or repaid and recent difficulties in achieving volume and profit and breach of bank covenants have proved the final nail in the coffin.
This will provide others with opportunity but the loss of someone as big as this will certainly reverberate across the sector. Lessons to be learned by others in similar growth modes'.
The downward movement simply reflects numbers below expectation and more competitive markets in which they trade. Samsung, Google and others are taking more of the wind out of Apple's sails. This may spur them on or it may indeed spur on the competitors...either way, their results are still pretty impressive and their cash pile is not exactly small.
When you're public and faced with pressure to increase share value and volume, it does you no favours to find your market suppressed or where what you generally manufacture, produce and sell, no longer provides either, options are limited. It has made gains in changing its focus and may have eyes set on being a considerably different business moving forward. Generating 4bn of profit on 50bn of sales and with no worries of share value or market capitalization sounds just perfect for a private company. Drops in revenue are a killer to publicly quoted companies - period.
Let's not celebrate prematurely, Comet hit the rails in Q4 as did many other retail businesses. Here we are in Q1 and Jessops hits the buffers. Next two years will sort out the men from the boys and I can see some medium to larger players in the IT sector toppling over too.... no names of course..
A common feature in many large enterprises that have become large as a consequence of acquisitions is generally an onerous bundle of debt further up the ownership chain and pretty hurtful interest rates; this despite the fact the Bank of England rate has remained static and low for some years. That debt is generally secured and will always demand certain financial ratios (covenants) are routinely met.
You might just get away with things for a while if you make a positive operating profit despite onerous interest pushing you into losses; should you make minute profit or move into operating losses before interest kicks in, then you're in a bit of a muddy hole. Credit Insurance cover on 2E2, given the balance sheet position has been limited or indeed declined by some Insurers for soem years now. One way out is to re-work debt repayment arrangements, cut out cost, change management, seek some concession on accrued loan note interests, re-structure, increase the bottom line and maybe sell the business - none is an easy task in the current climate
Stimulating corporate investment is fine but when it shafts you right up the arse given the space you give it, it's time to plug it or more sensibly, restrict it somewhat. This would not force such businesses to stop trading in the UK and anyone that says they would is talking bollocks. UK Gov needs to stop greasing its bum.
This scale of tax evasion is simply corporate greed. I really also want to know why HMRC is so hopeless at tracking this and amounts we lose to VAT and missing trader fraud. They need to get their priorities right
Few things to point out... Opcapita was a 'secured' creditor, ergo it registered legal charges securing the 'loans it was making to the firm, not unlike the banks or any other creditor who felt security would be required given the risk. The galling part for many here is it's a bit much for the parent to secure it's risk in a trading subsidiary but Opcapita uses investors money, not it's own per say.
Administrator's get their fees paid out of recoveries and are guaranteed. Redundancy payments regrettably often fall on the shoulder of the tax-payer.
Surprised about the level of apparent recovery on retention of title. This is a veritable minefield in terms of enforcement.
The art, as ever, is the ability to note change and be willing to adapt, do things differently and even move into areas previously alien to you. Your ultimate goal is to progress but through delivering value to your clients, employees and shareholders irrespective of fluctuations in revenue/profitability goals. Alas, as a publicly listed giant or behemoth such rational movements are anathema and this is where the crux of the matter lies. HP should be either be broken up, taken private or be run by people with an eye on what's coming and not what has been. It's fate, otherwise, is uncertain.
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