20 May, 2009 | by Nidish Kamath
Forbes magazine had an interesting piece about large business acting as lenders to small business. This comes right behind the biggest credit meltdown in history. This lending comes in the form of retail financing or vendor financing, and in some cases, in the form of corporate venture funding. In 2008, as per NVCA, corporate venture funding arms amounted to 19.2% of all venture deals, an amount that works out to $5.4B out of total deals worth $28B. Similarly, the Forbes article pointed to $52B raised for corporate non-venture financing.
What does this mean for the shareholders in these corporations? Let us look at a few numbers. A stock screen on Yahoo for companies with positive free cash flow, and picked companies that have positive cash balance on their balance sheets reveals about 896 stocks, and most notable among them being Berkshire Hathaway with $16440 of cash available per share. Since free cash flow does not include the cost of debt servicing by these companies, one should also look at the total debt assumed by these companies. A vast majority of these companies have very little to zero debt on their balance sheets. So, to keep matters simple, let us assume there is no debt servicing expense.
The stock screen reveals that, on an average, after excluding outliers such as BRK-A, each company has a 15% return on equity, and $1.3B of cash in the bank. There is a total cash position of $1.2 trillion. In other words, the $5.4B continue reading »
7 Mar, 2009 | by David Kaufman
I just celebrated the six month anniversary of being in transition. That’s the vogue way of saying unemployed these days. Like many, I was recently down-sized, or as I was told to say, my position was recently eliminated due to a re-organization. However you word it, I am out looking for work.
Reflection is inevitable during this type of life change, and I find myself looking back at the “rules” of Corporate America and how they seem to have changed. You know the ones I mean, those unwritten truisms we all know and try to live by, yet never saw in any handbook. I thought I would offer an updated perspective during these uncertain times, from the other side of the paycheck.
Before I begin, let me say, I am not an expert. I am not a career coach with formal training or special insights into the job market. I’m just a guy, like many of you, making some observations based on my journey. continue reading »
17 Sep, 2005 | by Richard Vinhais
I recently read an article, “Corporate Governance: A Development Challenge”, which was authored by two “organization for economic co-operation and development” (OECD) employees. It peaked my interest as it articulated a compelling argument for global corporate governance that I had not heard before.
The article touches on the broad spectrum of corporate governance and how it applies to the developing world specifically. I’ve been exposed to local corporate governance issues up to this point in my career and thought this article may expose me to a different perspective.
The article opens by posing a key question: “Is corporate governance as important in the developing world?” This question was a consistent theme throughout the article as it methodically elaborated via subtopic headings which included “why corporate governance matters for development”, “oligopolistic rivalry and corporate-control rents”, “Pyramids, cross-shareholding, multiple share classes.” And closes with a “what to do?” section. I will comment on each of these sections below followed by some analytical commentary. continue reading »