Business Insight Zone

No, not that Cash.

Ben Steverman of Bloomberg Businessweek got in touch this week to ask me about the implications of the huge wads of cash that so many companies are sitting on right now. Some of the key things I noted:

• It’s not surprising that big companies would have more cash on hand these days. Families and small businesses build up their savings as much as possible during hard times — and so do many savvy companies.
• There are a lot of highly successful companies with outsize cash hoards, from the famously cash-loving Berkshire Hathaway to Apple to EMC. So I wouldn’t be too hasty to criticize a company that doesn’t immediately spend its cash or pay it out in dividends.
• Good financial managers don’t let themselves be slaves to a given strategy as regards cash. They keep working to find the best strategy to build enterprise value based on current conditions in their own companies, across their industries, and in the economy at large. So don’t be surprised to see a lot of smart companies going a lot of different directions based on their best options at hand.
• I expect huge opportunities in M&A this year — and you have a lot more options for doing acquisitions when you have plenty of cash in hand.

Steverman also polled financial experts for his story, which was published today:

Companies Puzzle Over Record Cash Hoards
U.S. companies’ cash balances have never been bigger, but getting decent returns from their war chests poses a challenge

Do read the whole thing,which offers an interesting array of perspectives on the cash issue. And do tell me what you think of my own verdict on the matter — with which Steverman closes the piece:

“Having lots of cash is a great problem to have.”

~

Image via Philip Kromer, used under a CC-Share Alike license.

My mother will be so proud. (She has subscribed to SI for decades.) In the wake of our SXSW Interactive panel on sports metaphors, I talked with Phil Taylor of Sports Illustrated, who was writing a column about the prevalence of sports metaphors in American lingo. Here’s the result:

Time To Call A Reverse

Do read the whole thing — it’s entertaining and informative — but here’s my moment in the sun:

But speaking sports isn’t without its benefits. “It’s a quick, shorthand way to forge a connection,” says Tim Walker, social media manager for Hoover’s Inc., a business-information publishing company. Walker is a sports nut who recently led a panel discussion titled “Hitting Bombs: Better Social Business Through Sports Metaphors.” One of his tips is that business people should make sure their athletic references are appropriate for their audience. “With workplaces becoming increasingly diverse and international, talking about putting the ball in the end zone may not mean much if you’re talking to associates who grew up watching soccer and cricket while you were watching football,” Walker says.

If you’d like to read more of my thoughts on sports metaphors for business, start with this post.

~

Image source.

For a while there, I stayed on my hobby-horse about all the misleading or wrongheaded headlines (wrongheadedlines?) written about “unexpected” developments in this, the weirdest economy the United States has seen in many decades. I stopped blogging about it so much — how many times can you make the same point? — but it continued to bug me.

Imagine my satisfaction, then, when I came across these four stories in quick succession during this morning’s trawl of the business headlines:

1. Wall Street Journal — Manufacturing Stocks Rise
   Strong manufacturing reports helped boost manufacturing stocks, sending U.S. stocks up slightly, even as a rise in weekly jobless claims dampened some excitement over early first-quarter earnings. . . .
   
2. MarketWatch — Industrial output inches higher in March: Factory production alone rebounds; utilities check U.S. output growth
   U.S. industrial production inched higher last month as a cutback in utility use after an exceptionally cold February had the effect of dampening expansion, the Federal Reserve reported Thursday. . . .
3. Reuters — Crude rises as optimism offsets jobless data
   U.S. crude oil futures edged up in choppy trading on Thursday as optimism about economic growth in China and manufacturing activity in the United States helped offset disappointing jobless claims data and the stronger dollar. . . .
4. Reuters — Schwab profit drops, says worst has now passed
   Sluggish trading and low interest rates led to a 45 percent profit drop at Charles Schwab Corp, matching its own worst-case-scenario forecast, but the brokerage said the worst has now passed. . . .

Now, I know this isn’t rocket science we’re talking about, but it’s still refreshing to see a series of headlines and lead paragraphs that acknowledge the ambivalence to be found in most of the economic news today.

The good AND the bad

Yes, it would be great if all the news were good news — but it isn’t. And it would be easier to report if all the news were gloomy — but it isn’t. What we’re getting, instead, is a constant mix: strong manufacturing numbers and yet a rise in jobless claims; better factory production but weak utilities demand; optimism about growth in some areas running afoul of bad job numbers and currency headwinds; bad results for a financial titan tempered by an optimistic note about the trajectory of the economy.

Temperate headlines — I guess that’s what I want, in a nutshell. An acknowledgement, front and center, that we’re getting a lot of mixed signals, and that we might expect as much for some time to come.

If we are grown-ups, don’t we deserve grown-up presentation of the good news alongside the bad?

~

Related posts:

• 16 October 2009: Today’s trip through the economic headlines.
• 29 July 2009: How worked up should I get over financial headlines?
• 23 July 2009: Innumeracy in financial reporting?
• 17 July 2009: “I want you to have expected it.”
• 24 June 2009: Beware “unexpected”!
• 27 March 2009: What’s in a headline?

~

Photo by Louis Beche.

That’s the thought that popped into my head when I looked at our IPO Filings page for April today. Already this month, 12 companies have filed to go public on U.S. exchanges, which tracks well with the 22 that filed last month. (By contrast, no companies filed to go public in the first quarter of last year.)

Better news: three of the twelve companies filed for IPOs worth $500 million or more. In normal times — i.e. before the severe IPO drought of 2008 and 2009 — a half-billion-dollar IPO wouldn’t be anything to crow about. But in this constrained market, even offerings of that modest size loom large.

In an interview I did recently with Amy Reeves of Investor’s Business Daily, I said,

“[O]ne of the things I’m waiting for before I declare it a really healthy IPO market is I want to see a mix of deals in terms of the size of the offering.”

(You can read the entire Q&A on the IBD site.)

A few half-billion-dollar filings do not a “mix of deals” make, so I’m not ready to say that the IPO market is back to genuine health.

But it may be getting there.

~

Photo by RachelH_.

More choppy seas ahead?

The economists who call these things are having a disagreement among themselves, with most of the committee saying it’s too soon to tell whether recent preliminary numbers suggesting economic will hold up to sustained scrutiny. Meanwhile, one dissident member says that the recession ended last summer. All this according to this story in The New York Times.

The topic puts me in mind of what I wrote when we were headed into this mess:

It seems to me that the best businesses are managed to thrive in good times and bad — but that’s much easier to say than to do.

A trawl of the archives reveals that I’ve returned to that theme even more than I remembered. These posts are just a sampler:

• 2 April 2008: Economic forecasting: How’s the weather for YOU?
• 8 October 2008: Hard times call for an entrepreneurial outlook.
• 7 January 2009: What if the economy is worse than you think?
• 30 March 2009: The big economy and your economy.
• 8 July 2009: What if the economic world has changed?
• 26 October 2009: Divorce your emotions from the economy.

I encourage you to browse around in those posts and tell me how you think I did with my projections about the economy and my advice on what to do about it.

Meanwhile, I’ll reiterate my overarching theme: The economy doesn’t dictate whether a business will be managed well or poorly. Its managers decide that.

No?

~

Photo by Mike Baird.

Well, I can’t claim that I covered every facet of community management, but I did talk about some of the challenges and opportunities of community management in the B2B space in this podcast with my friends Doug Haslam (of Voce Communications) and Jim Storer (of The Community Roundtable):

Conversations with Community Managers (Episode #2) — Tim Walker, Hoover’s

I also squeezed in a couple of thoughts about how social media management relates to community management.

Please give it a listen and tell me what you think!

Our new IPO Scorecard is online. Yesterday I had a chance to talk about some of its highlights with the nice folks at Fox Business. Here’s the video:

(If the embedded video doesn’t work, you can follow this link.)

Some highlights from the Scorecard:

• Total number of IPOs in Q1 = 28. This was way up from Q1 2009 (2 IPOs), but slightly down from Q4 2009 (28 IPOs).
• Total value of IPOs in Q1 = $4.5 billion, way up from $700 million in Q1 2009, but well down from the $17.2 billion in Q4 2009.
• Average value of IPOs in Q1 = $160 million, down from $361 million in Q1 2009 and even further down from $537 million in Q4 2009.

Again, you can get much more detail from the IPO Scorecard. And if you have thoughts on our findings, we’d love to hear them in the comments here.

That’s the key ingredient for dealing with setbacks, in business as in other areas of life.

I’ve barely blogged for the past few weeks, what with South by Southwest, a slew of work projects, and a particularly hectic family schedule. My usual little windows of time for writing have been soaked up (or I’ve let them get soaked up) by a hundred other things. Meanwhile, topics for posts keep piling up, and at some point that backlog itself becomes part of the problem.

The trick — which I’ve known for ages but which I’m only applying now — is simply to climb back on the horse. Start again. Do something.

It’s the same in business, isn’t it? Maybe you missed your number for the first quarter, and you’re scared about what that means for your career. Maybe you just got laid off. Maybe you lost the big client. Maybe your new launch fell flat in the marketplace. You blew the big presentation. It could be anything.

What’s the answer? Get up, dust yourself off, and climb up there again.

• Call your ten best (remaining) clients.
• Write down ten things you could do to salvage the launch, and do the two best ones today.
• E-mail ten old friends to tell them that you’re looking for work.
• Rebuild your pipeline.
• . . .

You can fill in the blank with your own immediate remedy (and, please, feel free to share it in the comments). The point is the same regardless of the context: just get started again. The longer you sit on the ground rueing what’s happened to you, or concentrating on how you blew it, or worrying about the future, the harder it will be to get everything moving again.

What’s your best technique for motivating yourself to get back up on the horse?

~

Photo by Eric Ward, used under a Share Alike license.