April 24, 2012
New York
THE SAD STORY OF RIM
On Sunday I had a delegation of executives from New York at my home, well away from downtown, asking what had happened to Research in Motion and what to do about it. The story is not a fun one and began about a decade ago when RIM’s core efficiencies started to slide.
You can see from this chart how RIM grew, moved into the Risk Zone where it was more profitable than its all important Velocity of Cash Index could support, became a pool of cash vulnerable to easy predation, and then faltered.
The key is that even as RIM grew, its …
March 29, 2012
, New York
SHARP FAILS TO SCALE
News came in the last few days that Sharp, after experiencing big losses, changing management, and having problems delivering for Apple’s iPad, has sold 10% of its operations to Hon Hai. The deal values Sharp at $8 billion, or 22% of sales. Apple, by contrast, trades at 5X last year’s sales (though only about 2.5X projected sales for this year).
The problems at Sharp have been well understood for about a decade and a half. Plenty of time for management to fix this. The company’s showcase LCD plant at Sakai was a failure in its concept stage and is now the …
September 7, 2011
, New York
HOW TO SCALE: USE CLOUD INFLATION TO GROW SALES
There is a reason why Apple’s stock has not been killed by Steve Jobs’ departure: the company is a system, not a person, that scales on the cloud. Our Soccer Ball Metrics — the surface remains the same no matter the size of the sphere — show just how this is done.
Here you see the core — no joke — of Apple’s success: no matter that it was a $6 billion company in 1998 or $125 billion today, it has kept days of sales in inventories running at about three. This all important Soccer Ball Metric, when combined with a …