Michel de Guilhermier's Blog

Morale de l'Affaire Cahuzac.... !

Pensée du dimanche matin, à froid une semaine après...

Jérôme Cahuzac avait fait semaine dernière sur BFM TV une prestation "intéressante", délivrant son mea culpa.

La question que tout le monde se posait étant évidemment "est-il sincère ?". Et probablement que des sensibilités politiques vont intervenir dans cette question, la gauche avec un biais positif, la droite avec un biais négatif...

Mon sentiment est simple : je n'en sais rien, mais s'il y a bien une chose que la vie m'a appris, c'est qu'un homme ne se définit pas par ses parôles, ni même par ses écrits, mais bel et bien par ses actes et par ses choix concrets dans la vie.

Pour apprécier et juger un homme, regardez et analysez ses choix et ses actes.

Want Some Financial Advice from a "Guru" ?

Isn't this tittle compelling : "the Wall Street Self Defense Manual. A Consumer's Guide to Intelligent Investing" !

Any good investor knows this long time famous book from Ben Graham, "the Intelligent Investor", the one that young Buffet read eagerly.

But the issue here is that this book has been written by someone who surely doesn't have the same ethical standards as Graham, let alone his solid value-oriented approach.

That guy is Henry Blodget ! The very guy who has been barred from the securities industry for life. The guy who is not allowed to sell financial advice any more for the rest of his life !
 

Let's have a little rewind on history. Late 1998, as an analyst at Oppenheimer, he raised its price target for Amazon to $400 a share while it was then around $240. 2 weeks later, the stock did surge past $400, which of course made him a worldwide celebrity and an Internet guru. With such a track record he could be hired by Marrill Lynch for a modest $3M a year salary, which became $12M by 2002 !

But the issue is that while he was promoting Internet stocks to help his employer in the investment banking business, he was privately sending emails calling those very same stocks "junk" !

Sure, the guy is now barred from the security market, sure he was fined ($4M while he earned north of $18M during his 3 years at Merrill), but what an hypocrosy and how indecent that is to reap profit from his past actions.

However, those who have read the book found it very interesting and informative...

Ironically enough, Blodget now emphasizes the Buffet approach, with those "passive" investors who hold stocks for the long term will do much better than the short-termers. Good for him !

Just for the fun and the sake of it, enjoy the stock price curve below ! AMZN is roughly at a third of the peak it hit 7 years ago after Mr Henry made his raise ! The company was then valued $45bn while it was hardly making a billion dollars in revenues. How amazing as it could be, there were then many bright people believing trees would climb to the sky, and rapidly at that. Beware, this hasn't tottaly disapeared these days.

Retail : Quote of the Day, from Mrs B !

Rose Blumkin, the charismatic and energetic founder of the Nebraska Furniture Mart I spoke about yesterday, had one key tenet : "sell cheap and tell the truth" !

Whereas the "sell cheap" is quite straightforward and many try to apply it, I also very much like the second part of the tenet.

Indeed, I strongly believe that honesty, transparency, candid and direct customer relationships pay off overtime but I wouldn't say that these principles are wildly applied today. In e-commerce sessions, I can hear lots of techniques, but little true human laws basics ! But the real challenge in e-commerce is to use technologies to fill human needs. That's also why e-commerce businesses have to be managed by truly consumer and not technology driven leaders.

Back in early 2004 Photoways was the first French e-commerce company to create a blog, I also was the first CEO of an e-commerce company to open a blog (different from the Photoways corporate one), but I felt this was part of the necessary transparency a company and its chief should have vis-à-vis customers.

Mrs B also spent a considerable amount of time with customers, down at the store, granting them with a big smile, and I myself, tough I now back off from operations, still receive 4 to 5 customer emails a day, either congratulating me for the Photoways business or asking for help.

This is commerce guys !

Executive Compensation and Wage Policy. The Interesting Case of Whole Foods Market !

I guess I already mentioned it, but one of the reason I very much like Whole Foods Market as an investing target, is the sound and reasonable wage policy they have.

In a world (and not only in the US), where we often see outrageous exageration by top executives, here's the philosophy at WFMI :

- First of all, once a year, the entire compensation at everyone at Whole Foods is available for everyone to read, deciding in their own minds whether the compensation is fair and just.

- The 6 top executives of the management team all have exactly the same salary, around 450K$. Those kind of rates are very significantly below peers' levels. Here's what Walter Robb, co-fonder, has to say about that : "do we make less than executives at other companies our size ? Absolutely, but how much money is enough ?". And John Mackey to add : "I think that a lot of executives in corporate America are basically harming the cultures of their organizations by taking too great a compensation."

- No one in the company, including the executive team, makes more than 14 times the average wage rate !

- 93% of the Stock Options are distributed outside the executive team. The ownership of the company has been widely distributed !

Bottom line is that the employee turn-over is minimal and significantly below other retailers, and that no major executive leader has ever been lost to another company !

A company is a bunch of people working together towards a common objective. Such policies do strongly cement the community and fellow workers have a strong incentive to be 100% motivated about the company project.

Eric Schmidt Turns Down 30.000 Options as a Director of Apple !

As any other Director of Apple Computer, Eric Schmidt, CEO of Google and newly appointed to the Apple's Board, had received an automatic grant of 30.000 shares. But know what ? He turned down the offer, instead saying he would buy 10.000 shares on the open market, as anybody else !

I'd like to see this kind of behavior in other companies.

Options are however a sensitive issue at Apple these days : the firm is currently delinquent in its SEC regulatory filings because of an internal investigation into its stock option procedures in the years from 1997 to 2001.

And by the way, still hanging on my 75$ stock price target before mid october ! I expect some new products to be introduced soon, as Apple is holding a press event on the 12th in San Francisco, the very day Apple Expo starts in Paris. Maybe just dreaming, but also awaiting the long rumored video rental service. This one makes Walmart, which has grabbed 40% of the $17 billion US DVD market, very nervous. I'll talk about that tomorrow.

Latest joke in Cupertino : Apple is RSS friendly. In that particular case, RSS meaning the infamous Random Shutdown Syndrom which has affected my black MacBook (now in AppleCare's hands for the last 2 weeks).