“Little over a year ago, ethanol was winning the hearts and wallets of both Main Street and Wall Street, with promises of greater U.S. energy independence, fewer greenhouse gases and help for the farm economy. Today, the corn-based biofuel is under siege.
“In the span of one growing season, ethanol has gone from panacea to pariah in the eyes of some. The critics, which include industries hurt when the price of corn rises, blame ethanol for pushing up food prices, question its environmental bona fides and dispute how much it really helps reduce the need for oil.
“A recent study by the Organization for Economic Cooperation and Development concluded that biofuels 'offer a cure [for oil dependence] that is worse than the disease.' A National Academy of Sciences study said corn-based ethanol could strain water supplies. The American Lung Association expressed concern about a form of air pollution from burning ethanol in gasoline. Political cartoonists have taken to skewering the fuel for raising the price of food to the world's poor.
“Last month, an outside expert advising the United Nations on the ‘right to food’ labeled the use of food crops to make biofuels ‘a crime against humanity,’ although the U.N. Food and Agriculture Organization later disowned the remark as ‘regrettable’ …
“Now the fuel's lobby is pleading with Congress to drastically boost the amount of ethanol that oil refiners must blend into gasoline. But formidable opponents such as the livestock, packaged-food and oil industries also have lawmakers' ears. What once looked like a slam-dunk could now languish in pending energy legislation that might not pass for weeks, if ever.
“Ethanol's problems have much to do with its past success. As profits and production soared in 2005 and 2006, so did the price of corn, gradually angering livestock farmers who need it for feed. They allied with food companies also stung by higher grain prices, and with oil companies that have long loathed subsidies for ethanol production.”
(“Ethanol Craze Cools As Doubts Multiply; Claims for Environment, Energy Use Draw Fire; Fighting on the Farm.” Lauren Etter. Wall Street Journal: November 28, 2007. pg. A.1)
TREND OR BLIP? The push and pull of competitive forces in a free marketplace cause considerable dislocations as resources naturally would move toward their highest and best use. Yet what of resources for which multiple markets exist? What of resources for which externalities counter natural market forces?
FOLLOW THE MONEY, yes; and follow too the politics of power.
DISCERNMENT of new trends versus blips along the way may rest upon our ability and willingness to use paradoxical logic along with foundational truths.
Opposition in All Things
Longitudinal Latitude?
“On a recent fall day the two new bosses at Chrysler traveled to the company's test track in Chelsea, Mich., an hour's drive west of Detroit. The two -- Chief Executive Robert Nardelli and Vice Chairman James Press -- were to spend the entire day poring over every vehicle in Chrysler's lineup. It wasn't pretty. There was the cheap-looking plastic on the dash of the Dodge Caliber. A poorly placed cruise control switch on the Chrysler 300. Windows that rolled down herky-jerky on the Jeep Grand Cherokee. But what was remarkable about this visit was that by the end of the day Nardelli had ordered more than 200 engineering changes to fix the array of problems and make improvements, at a cost of at least $100 million. The armrests and door grips would feel softer. Electronic windows would get one-touch switches. And yes, that cruise control button would be relocated. No lengthy meetings. No black-bound briefing books. Just get it done…
“As a private company Chrysler has the latitude to make long-term decisions that would have been difficult, if not impossible, to justify in a world where shareholders punish companies for missing earnings projections by a penny per share …
“At Chrysler, Nardelli started immediately poking his nose everywhere. He drives a different car to and from work each day, and meets one of Chrysler's chief engineers in the company garage each morning ‘to go over a few items.’ He asks piercing questions that put employees on the defensive, often challenging the status quo. Why, for example, he wants to know, aren't we improving the air-conditioning systems in all our vehicles, rather than chasing complaints on one model? His probing style grates on some. ‘You start to wonder, Is anything okay with this guy?' said one senior manager. ‘This is a guy who could find a better way to create the earth.’
“‘With me, it's either a quick yes, or a quick no -- never a slow maybe,’ Nardelli says.”
(“Chrysler's Last Stand.” Joann Muller. Forbes: November 26, 2007. Vol. 180, Iss. 11; p. 168)
DO YOU WONDER how the market will answer -- with a quick yes, a quick no, or a slow maybe... ? At Home Depot Nardelli got a pronounced "No thank you" from his supposed "troops."
SO ON THE ONE HAND the market is demanding real action now, while on the other the culture of Chrysler is in the hands of long-term managers and workers.
Not Customers, Raw Materials
“Give Rupert Murdoch his due. When the News Corp. chairman approved a $580 million deal to acquire MySpace in the summer of 2005, he was way ahead of the pack… But now the pressure is building for MySpace to prove it can be the cash cow that Murdoch and others are betting on. MySpace, still by far the largest social network, has lost some of its mojo lately as competing networks spring up like dandelions after a rain shower, crimping its growth.
“Most important, social networks have yet to figure out a business model. Advertisers, for instance, aren't sure that social networks can become a great platform for their pitches. ‘Social-network advertising is still a work in progress,’ says Debra Aho Williamson, a senior analyst with research firm eMarketer.
“Murdoch's challenge is to transform the Web phenom into a digital media powerhouse capable of richly monetizing eyeballs without driving off the very users who made it popular. Even MySpace executives concede they're winging it. 'I don't think our monetization strategy will be a prize-winning Harvard Business School study,' says Jeff Berman, general manager of a new MySpace TV unit…
“Social networks have put most of their faith in advertising. But people don't go to MySpace to find products or information. Users are so engrossed with talking to friends and posting party pictures that they pay little or no attention to the ads. So ad rates on social networks are much lower than prices for search keywords or traditional ads… ‘Standard display ads -- and I don't care how much targeting you do -- it's not working well,’ says Ian Schafer, president of online ad firm Deep Focus.
“Media giants such as Warner Bros. and NBC have set up sites on MySpace to promote their content. But ad providers say some big consumer brands are leery of running ads beside material created by users. ‘Almost every single client we have says, “Do not run my ad on a social network”,’ says Tim Vanderhook, CEO of ad network Specific Media.
“MySpace is working to change that perception. It is rolling out a new system with computer algorithms that glean data about its users. That should produce ads that are more closely targeted to users' interests and make advertisers more eager to spend money on the site…
“Loading up on ads can backfire, though. MySpace already turns off some members by putting as many as nine ads on a page. ‘I really hate it,’ says Vinh Pham, a 24-year-old Web developer who now spends more time on Facebook than MySpace because of the ad deluge. ‘You have to see, like, 100 ads just to do anything on MySpace’."
(“In Search Of MyProfits; The pressure is on for Murdoch to turn MySpace into a cash machine.” By Spencer E. Ante, Ronald Grover, Heather Green, with Catherine Holahan in New York. Business Week: November 05, 2007. , Iss. 4057; pg. 23)
FOCUS: Customers pay you money; raw materials don't. Raw materials must be care-fully tended indeed. As you do so, customers pay for you to convert raw materials into something of value for them. What customers are willing to pay for is Priority One, not what the raw materials might become.
THE TEMPTATION here is to confound and reverse the two. Focus.
Competent Distinctiveness
“Chipotle Mexican Grill has arguably become the country's most successful fast-food chain in recent years by rejecting almost every major technique on which the industry was built. Not only does it not show the product, it doesn't advertise on television. It doesn't franchise. It has some of the highest ingredient costs in the industry. And its executives aren't especially concerned that customers wait as long as 10 minutes in lines that routinely stretch out the door.
“Nonetheless, Chipotle's shares have more than doubled in the past year, making it the best-performing publicly held U.S. restaurant chain. And while traditional fast-food chains are posting same-store-sales growth in the low single digits, Chipotle has increased its same-store sales at a double-digit rate each year for almost a decade…
“Of course, consumers are fickle when it comes to restaurants, making it difficult for chains to maintain success over time. Chipotle's narrow menu could make it hard for the chain to hold customers' interest…
“Chipotle knows it has a problem with long lines at peak times. The chain has videotaped as many as 50 people walking away from a single location in one hour because they weren't willing to wait.
“Chipotle's president and chief operating officer, Monty Moran, says the company has been trying to speed up the lines by installing automatic change machines at cash registers and using handheld credit-card devices to take orders from customers in line. It also is placing greater emphasis on its restaurant managers, paying them annual salaries and bonuses that total in the six figures.
“But executives say that while the lines are long, they move quickly. And, ‘we don't ever want it to be speed over great service,’ Mr. Moran says.”
(“Burrito Chain Assembles a Winning Combo; Ignoring Fast-Food Formula, Chipotle Promotes Service, Costly Natural Ingredients.” Janet Adamy. Wall Street Journal: November 23, 2007. pg. B.1)
WHY AND FOR WHAT are customers are paying upwards of $6.00 for a burrito? Is it fast service? Is it quality service? Is it socially responsible ingredients? Is it flavor and freshness?
SO AS COMPETITIVE pressures appear to push management toward non-core competencies, and as operational pressures push costs upward, what needs to be the focus?
ARE YOU COMPETENTLY DISTINCTIVE and distinctively competent?
Real Value Creation
“As the Big Board's chief for nearly four years, John Thain engineered two big deals that helped significantly increase the value of New York Stock Exchange members' stakes.
“Mr. Thain, Merrill Lynch & Co.'s new chief executive… may need to resort to those deal-making skills -- and make some tough decisions.
“Such moves, Wall Street executives say, could include separating the firm's pieces…
“The reason for some deal making is that Wall Street is valuing Merrill at $49 billion. That is less than what some analysts and investors believe Merrill's pieces are worth. One analyst estimates the value of Merrill's brokerage business, with its 16,000 brokers, at $36 billion…
“BlackRock Inc., the asset-management firm in which Merrill has a nearly 50% stake, has a stock-market value of nearly $23 billion, making Merrill's stake in that alone valued at $11.5 billion. Analysts say Merrill's stake in Bloomberg LP, which isn't publicly traded, is valued at an additional $4 billion.
“That adds up to nearly $52 billion. And that doesn't include the institutional-securities business, which generated the mortgage losses but which has in the past few years reported higher profit than the brokerage arm and will likely make good returns in the future.”
(“At Merrill, Thain Faces Tough Calls.” Randall Smith and Aaron Lucchetti. Wall Street Journal: November 16, 2007. pg. C.1)
SYNERGIES come in two types: the most exciting are seeming revenue synergies -- where grand schemes project novel combinations yet untried. The more mundane are cost synergies -- where routine operations are melded into economies of scale. The former destroy value; the latter may create value. Focus! and the deconstruction likely will be greater than the sum of the parts.
Know Thyself
“Though the luxury sector is expected to put in another strong performance this season, the lower end of that market -- selling so-called affordable luxury to aspirational buyers -- is starting to feel the pinch of the weak economy... Only the most elite brands and the retailers catering to the richest customers are likely to escape unscathed…
“The outlook is very different from the past several years, when sales of all sorts of luxury goods exploded, boosted by a rising stock market and strong fashion trends that spurred purchases. The boom led marketers to broaden their target audience from the super-wealthy to include the growing ranks of upper-middle-class consumers…
“For some brands, the strategy involved going slightly more down-market, tempting mid-income consumers with relatively affordable entry-level luxury products like Chanel sunglasses, Coach wrist purses or silver jewelry at Tiffany & Co. -- while still selling ‘extreme’ luxury products such as designer watches and handbags costing thousands of dollars. The new less-affluent customers are now proving vulnerable to a variety of economic factors that don't appear to faze the very rich.
“As a result, some brands may soon retreat from the affordable-luxury strategy and begin emphasizing their more elite or customized products as a way to reach the wealthier consumers…
“Some top-tier brands already appear to be trying harder than usual to distance themselves from the masses. Robb Report, a magazine for the super rich, is joining with Rolls-Royce, Audemars Piguet, Louis XIII de Remy Martin and Wynn Las Vegas, among others, to market a series of ultra-custom products and experiences -- among them, a $1.5 million Wynn Las Vegas vacation package that includes a round of golf with course designer Tom Fazio, $150,000 in jewelry and a Ferrari 599 GTB Fiorano.
“‘The top end of the market has a ton of vitality,’ says Frann Vettor-Gray, senior vice president, multimedia at Robb Report…
“Bain & Company divides the global luxury market into three layers, each with its own dynamics. At the top tier, brands such as Hermes, Loro Piana, Van Cleef & Arpels and Harry Winston, targeted to the super-wealthy, account for nearly a quarter of luxury spending. The next tier, representing 36% of spending, is the aspirational market, which blossomed during the late '80s and early '90s as brands like Gucci and Louis Vuitton expanded around the globe and introduced smaller, more affordable leather goods that became status symbols. Bain defines the remaining 40% as ‘accessible’ luxury -- brands such as Coach, Burberry, Hugo Boss and Tiffany, which specialize in luxury accessories for the affluent middle-class.”
(“'Affordable Luxury' Stores Feel Economy's Pinch.” Vanessa O'Connell. Wall Street Journal: November 9, 2007. pg. B.1)
AREN'T DEFINITIONS SLIPPERY and elusive creatures? Beware of how you define yourself. Beware of trying to be "all" things to "all" people. Focus.
Some Good News!
“Calling someone an optimist these days may be the polite way to say he's a sap. Optimism often occupies a second-class compartment in the train of human values, and is derided as a naive, soft-soap disposition that distorts the realities of life.
“Yet, in the palette of human temperament, a rose-colored view of the future is the dominant hue, regardless of culture or nationality…
“Two research teams exploring the anatomy of expectations offer a new perspective on the power of a positive outlook…
“Far from deforming our view of the future, this penchant for life's silver lining shapes our decisions about family, health, work and finances in surprisingly prudent ways… 'Economists have focused on optimism as a miscalibration, as a distorted view of the future,' said Duke finance scholar David T. Robinson. 'A little bit of optimism is associated with a lot of positive economic choices' ...
“Optimists, the Duke finance scholars discovered, worked longer hours every week, expected to retire later in life, were less likely to smoke and, when they divorced, were more likely to remarry. They also saved more, had more of their wealth in liquid assets, invested more in individual stocks and paid credit-card bills more promptly.
“Yet those who saw the future too brightly -- people who in the survey overestimated their own likely lifespan by 20 years or more -- behaved in just the opposite way, the researchers discovered.
“Rather than save, they squandered. They postponed bill-paying. Instead of taking the long view, they barely looked past tomorrow. Statistically, they were more likely to be day traders…
“The influence of optimism on human behavior is so pervasive that it must have survival value, researchers speculate, and may give us the ability to act in the face of uncertain odds…
“All in all, Dr. Seligman said, optimists tend to do better in life than their talents alone might suggest.
“Except lawyers.
“Surveying law students at the University of Virginia, he found that pessimists got better grades, were more likely to make law review and, upon graduation, received better job offers. There was no scientific reason. 'In law,' he said, 'pessimism is considered prudence'."
(“Except in One Career, Our Brains Seem Built for Optimism.” Robert Lee Hotz. Wall Street Journal: November 9, 2007. pg. B.1)
ISN'T IT NICE to see the bright side of things once in awhile? In the face of possibly daunting uncertainty, why not juice our survival odds in any little way that we can? Let's all go tell a lawyer, or an economist, to have a great day!
Efficiency Above All
“One morning in August, Robin Dayer arrived at Abbott Laboratories' headquarters to interview for a financial-analyst position. By nightfall, she was hired.
“Ms. Dayer, 45 years old, was one of four candidates who interviewed for the job. They were part of a program, begun in July, to accelerate the pharmaceutical company's recruiting process, which had required two or three interviews over several weeks.
“Welcome to the world of speed interviewing, a growing phenomenon in corporate America. The strategy, which helps employers lock in top candidates before they explore other options, reflects companies' growing concerns about meeting staffing needs. They face a looming shortage of skilled workers as baby boomers retire and employment expands in areas like health care, finance and technology.
“Much like speed dating, the idea is to meet with multiple job hunters for a position in a matter of days or even a single day. Some companies extend job offers to the top candidate within hours of meeting him or her, while others conduct follow-up interviews with their top picks within a few days and then select a winner.
“Speed interviews can involve as many as 200 candidates for entry- and midlevel positions. For the most senior jobs, only a handful of professionals might be invited. The job hunters have usually been prescreened, and some have had successful phone interviews.
“Greg Schwartz recently interviewed about 50 prescreened candidates for sales jobs at Zillow.com… He met with roughly a dozen a day for a half-hour each at hotels in New York, Chicago and Los Angeles, with the top candidates being asked back the following day for hour-long meetings. Then a select few were flown to Zillow's Seattle office for a final interview…
“Speed interviewing can also help employers eliminate candidates who are a poor cultural fit early in the recruiting process. Zappos.com, an online retailer… hosts private job fairs for accounting, call-center, merchandising and product-information positions. The daylong events usually draw as many as 200 job seekers who meet individually with four recruiters for about five minutes each.”
(“Speed Interviewing Grows as Skills Shortage Looms; Strategy May Help Lock In Top Picks; Some Drawbacks.” Sarah E. Needleman. Wall Street Journal: November 6, 2007. pg. B.15)
I AM IN SUCH A HURRY I can't even comment on this. I'm turning over my thinking to Jack Welch: "We spend all our time on people. The day we screw up the people thing, this company is over."
ABOVE ALL, surround yourself with great people. Invest in people; they are your most vital asset.
ISN'T IT FUNNY how we ignore tired old cliches at our peril?
One Kind of Miracle
“PetroChina Co., the main oil and gas producer in China, became the world's biggest company in the course of a few hours of trading yesterday. Or did it?
“PetroChina's stunning debut on the Shanghai Stock Exchange again demonstrated the force of China's bull market, which has more than doubled its benchmark stock index so far this year…
“By some measures, PetroChina could now be valued at more than $1 trillion, which would make it by far the world's largest company by market capitalization.
“Yet the soaring valuations put on PetroChina and other Chinese-listed companies seem to say more about the problems and idiosyncrasies of China's market than the performance of the companies themselves.
“In fact, it is difficult to determine the real value of Chinese government-controlled companies like PetroChina… They have complicated corporate structures that keep most of their shares locked up in government hands, with the few that are publicly traded spread across different markets. The scarcity can drive up prices. And the problem is compounded by China's capital controls, which can cause domestic prices to differ greatly from those on other markets…
“Whatever its prospects, PetroChina is also benefiting from the overall enthusiasm of Chinese investors, whose unchecked eagerness to put money into stocks has drawn increasing official concern. The seemingly unstoppable rise of China's stock market has drawn worrisome comparisons to the bull markets in Japan and Taiwan in the 1980s, and to the U.S. technology-stock bubble.
“‘It's very difficult, almost impossible, to predict bubbles. But what we can say is that, based on historical examples, this kind of miracle is never sustainable,’ says Zuo Xiaolei, chief economist for China Galaxy Securities in Beijing. ‘Whether foreign investors believe in this or not is up to them’.”
(“Moving the Market: How Big Is PetroChina? Market Cap May Exceed $1 Trillion -- or Not.” Andrew Batson and Shai Oster. Wall Street Journal: November 6, 2007. pg. C.3)
THE REAL VALUE of any thing is what the next buyer is willing to pay for it, not what the former buyer paid. It is up to us to invest meaning into whatever we wish. Depending on where we stand, we will perceive our real dreams and fears.
Ingrained in the Popular Mind
“Ben Bernanke is a married man. But if he weren't, there's at least one woman who wouldn't want anything to do with the Federal Reserve Chairman's policy charms: Gisele Bundchen. The Brazilian supermodel is reportedly now insisting that she be paid in a currency other than the U.S. dollar.
“‘Contracts starting now are more attractive in euros because we don't know what will happen to the dollar,’ the model's twin sister and manager in Brazil, Patricia Bundchen, told Bloomberg recently. The ubiquitous runway diva even demanded payment in euros when she signed a contract in August to promote Pantene hair products for Procter & Gamble Co., according to a Brazil magazine. Think about that one: She's willing to sell a U.S. product, but she won't accept payment in U.S. currency.
“It's one thing to be rejected by Warren Buffett, who's been predicting the dollar's demotion for years. But it's an ominous sign when dollar weakness becomes ingrained enough in the popular mind for the currency to be spurned by runway models. At least Gisele hasn't yet declared that she prefers the Canadian loonie, which would really be humiliating. That's like being dumped by your date for the PC geek in those Apple Macintosh ads.
“This is what happens when the Fed and U.S. Treasury give the impression that the dollar's decline is no big deal, and that a little devaluation might even be useful. Nations start to de-peg from the dollar standard, and people around the world start to dump the greenback. We hope the Fed shapes up before Tom Brady, the New England Patriot quarterback and Gisele's boyfriend, starts demanding that he be paid in euros just to keep up.”
(“Gisele Dumps Ben.” Wall Street Journal: November 6, 2007. pg. A.18)
TRUE AND FALSE, accurate and distorted, whole and partial, factual and perceived, socially constructed (un)certainties are the reality from which we act, and thus the world in which we live.
Sterile Hybrids
“Credit turmoil has claimed two scalps on Wall Street in a week -- and exposed the shortage of talent for the biggest jobs in finance.
“Both Citigroup Inc. and Merrill Lynch & Co. saw troubled chief executives hastily depart as write-downs fueled by losses on mortgage- related securities spiraled near $10 billion. Neither had a ready replacement, forcing them to get by with interim arrangements as the search for successors is conducted.
“The dearth of CEO material owes much to the Wall Street culture in which executives are pushed to maximize profits and quickly get axed if they fail to deliver. That sullies the resumes of many would-be chiefs. What's more, most Wall Street firms are now global publicly held companies, not the private partnerships of yore, meaning a CEO must be skilled both in presenting the public face of a company and understanding the nitty-gritty of finance.
“‘It's a weird state of affairs that these phenomenal global companies can't self-reproduce executives,’ says Glenn Schorr, a financial services analyst at UBS AG. ‘It is a function of the culture and the leadership or lack of leadership’ at each firm, he says.
“Boards at Citigroup and Merrill are likely to look outside their firms for successors.”
(“In Citi Shake-Up, Broader Troubles; Perform-or-Die Culture Leaves Thin Talent Pool For Top Wall Street Jobs.” Aaron Lucchetti and Monica Langley. Wall Street Journal: November 5, 2007. pg. A.1)
PHENOMENAL complexity certainly leads to unprecedented uncertainty, and incredible impotence. We reap what we sow.
Less is Indeed More
"Mary Mooney and her husband were soaking up the sun in Florida when they saw a Buick Enclave… and decided they just had to have one. But when the couple called two dealers back in Michigan, where they live most of the year, the model they wanted was sold out at both.
"So instead of flying home, the Mooneys bought an Enclave in Florida and drove it 1,300 miles back to Michigan…
"The tight supply of Enclaves… is no accident. Bouyed by a new labor contract that reduces its costs, GM is keeping a tight rein on production of the Enclave in an effort to avoid past mistakes that forced it to offer discounts and cheapened the image of the company's brands.
"'We want to keep [the Enclave] hot,' says GM Vice Chairman Robert Lutz. 'Nothing destroys the value of a new product faster than over producing.'
"In the past, when GM had hot models, it usually built as many as it could, and almost always ended up with lots filled with unsold vehicles. For example, the Chevy HHR, a retro-styled wagon launched in 2005, sold briskly at first, often at full sticker price. But after cranking up production and offering discounts to boost sales, GM had a glut. Fifteen months after the HHR was introduced, Chevy dealers had enough in stock to last almost five months without ordering more. Since then, GM has had to continue discounting and dump thousands of HHRs into rental fleets, which eroded the margin on the car, and badly watered down its cachet…
"It's a risky move. The crossovers… make a lot of money for GM at a time when sales of its highly profitable trucks and SUVs are falling. GM is also struggling to produce steady profits in North American and needs every dollar it can bring in.
"The need to maintain revenue means GM can't apply the tight-supply approach to all of its models, their best-selling cars and trucks…
"Meticulously controlling supply takes a page out of the playbook used by many of GM's more profitable foreign rivals… Both Toyota Motor Corp. and Honda Motor Co. ratchet production levels up or down to stay in line with demand and minimize the need for discounting."
(“How GM Handles a Hit: Build Fewer; Wary of Repeating Mistakes, Car Maker Cuts Production To Keep the Enclave Hot.” John D. Stoll. Wall Street Journal: October 31, 2007. pg. B.1)
THE TAO SAYS, "One gains by losing." And, "If you want to become whole, let yourself be partial." To everything there is a season.
Failing Forward
“America is supposed to be a great country for second chances. Historians relish the roller-coaster careers of Abraham Lincoln and Richard Nixon -- both written off as hopeless losers, only to rise to the presidency a few years later.
“Recent corporate comebacks are just as startling. Wasn't Robert Nardelli portrayed as a pariah for life after losing the top job at Home Depot Inc. in January? Guess again. In August, he resurfaced with a dazzling new job: running Chrysler LLC.
“All of which invites outsiders to keep a keen eye on the eventual destiny of Stan O'Neal, who stepped aside yesterday as chairman and chief executive of Merrill Lynch & Co. During the final weeks of his tenure, Merrill posted a $2.24 billion third-quarter loss, fueled by an $8.4 billion charge for problem loans. Mr. O'Neal fared somewhat better; his retirement package totals $161.5 million.
“Merrill's dismal performance means that even Mr. O'Neal's defenders don't expect him to attract new CEO offers right away. The banking and brokerage company's stock has skidded 30% this year, while its credit ratings have been downgraded. It may take years to mend the firm.
“What's more, Mr. O'Neal became known at Merrill for his tough, brittle style and the rapid turnover among his lieutenants. Firms that want a charming boss are likely to look elsewhere.
“Yet with the passage of time, Wall Street tends to forgive high achievers with one dreadful year blighting their resumes…
“Ousted CEOs who have bounced back, like Chrysler's Mr. Nardelli, benefited greatly from continued support by their friends and mentors. Networking can't rescue everyone; if fraud or personal misconduct led to a CEO's firing, that's almost always the end of the story. But in many cases, recruiters say, it's white male executives who mingle on the golf course, work their college networks and benefit from apprenticeships at giant companies such as General Electric Co. who are most likely to have strong booster networks…
“Mr. O'Neal's Merrill Lynch payout is big enough that he needn't ever work again. Yet at age 56, he is young enough to tackle another big project. And it's a good bet that he will look for a way to vindicate himself. Who knows -- he may even write a book.”
(Business: Is There a Second Act for O'Neal After Merrill?” George Anders. Wall Street Journal: October 31, 2007. pg. A.2)
STAY CLEAN; never give up; learn from all that you do; forge strong bonds; build upon your successes, and never look back.
