Please Apple, make us more profits … (#moarrrrrrr)

Apparently, Apples 51 quarter winning streak of delivering uninterrupted sales growth is over.

The end is nigh.

Sell sell sell and reconsider your position.

At least that’s what this article and a few other analyst reports would have us believe.

Apple investors are seeking answers on whether lackluster sales of the device, the company’s biggest revenue generator, reflect a broader slowdown in the market for high-end smartphones – or just the pause before the next upgrade frenzy.

Sure they are. Because you know what, this is the fundamental problem with modern capitalism.

It begets itself.

Greed, ladies and gents. Alive and well, and apparently as a race obsessed with the pursuit of limitless profits, we are positively miserable when they don’t rise to infinity and beyond (high Buzz Lightyear !).

Apple has defined the post PC era (don’t argue, the numbers, as a friend recently reminded me, don’t lie, so look at those declining PC and Laptop sales and make peace with it).

They’ve also given us the Smartphone, the modern tablet, digital music and the whole app revolution.

Let them be. And the myriad of others like them.

Let them be …. Themselves ? Innovating at their own pace. Trying new things. Daring to be different.

Apple isn’t going anywhere. Neither are their stratospheric profits and dividends.

What should go somewhere though is greed.

Focus on sustainability and how, through redefining modern capitalism we can learn there are many more important things the evolution of the modern corporation can bring us.


The Trust Tax

Chatting to a few friends about yesterday’s entry on rand outflows and seemingly endless legislated goal post shifting, it made me think of one of the best business books I’ve read in recent years.

Stephen Covey’s “Speed of Trust”.

Poignant. Thought provoking. Common sense:

..Say what is on your mind. Don’t hide your agenda. When we talk straight, we tell the truth and leave the right impression. Most employees don’t think their bosses communicate honestly. This creates a trust tax. This causes speed to go down and costs to go up. We spend entirely too much time trying to decipher truth from spin.
Straight talk needs to be paired with tact. There is no excuse for being so blunt that you hurt feelings and destroy relationships. Tact is a skill that can be learned and when coupled with straight talk, will build Relationship Trust.

The same applies to Government and Business.

By speaking with “their feet” and sending Rand denominated profits overseas with increasing momentum, business is avoiding the elephant (Rhino, Giraffe?) in the room.

They simply don’t trust Government, or it’s ability to lead and stay true to form with consistent business friendly policy implementation. With the sheer amount of tow-the-party-line rhetoric that emanates daily from various ministerial departments, regardless of the amount of independent and highly regarded expert and academic commentary to the contrary, it’s not hard to understand why. VISA debacle and nuclear power procurement program I’m looking at you.

The flip side of the coin holds true. Government doesn’t trust “big” business. After all, in their circa mid-1980’s politbureau mindset, it’s a capitalist persuit, looks after the needs of a few (shareholders and equity participants, the nerve, right?) and is hard to control, if at all, without rigid policy enforcement and doctrines.

Nonetheless, it generates a steady mass of tax revenues, so it’s a neccesary evil. And well, it provides jobs. Unless you’re in the mining industry.

So neither side trusts the other. The trust tax grows. A stalemate ensues.

Neither is good for the SA public, the future of our economy, nor our pursuit of increasing our ranking in the global competitiveness stakes.

I suspect Government has more to lose, and thus more compromises to make. But there has to be more open and honest dialogue that creates TRUST.

At the moment, there’s nothing but a silent, stead hum of feet heading towards the proverbial exit door, buying up assets abroad.

It’s like packing for Perth, but without the suitcase.

Rand today, gone tomorrow

Yesterday’s Business Day published a very informative, if not entirely terrifying article entitled “SA cannot bank on bulwark against reckless racial agenda”. Written by John Kane-Berman, who works at the South African Institute of Race Relations, it provides a frank view on new SA government transformation regulations, including allowing tenders to be adjudicated on the 50/50 rule going forward for contracts under R10m in value, and highlighted the continual goal post shifting for BEE rules and targets that companies must comply with.

I urge you to read it here.

South African commerce and industry is struggling.

This is no secret. One has to look no further than the myriad business barometers that survey executive and senior management sentiment to see the picture is depressing. It’s one that shows an economy saddled with a downtrodden local and global market, collapsed commodity prices, runaway administered input costs, expensive unskilled and volatile labour. Throw in the inability to recapitalise industrial capability with the latest innovations in mechanisation and advanced manufacturing from overseas, no thanks to a chronically weak rand, we could argue the patient in question would ordinarly be heading to the nearest emergency room for an ER consult.

But not in South Africa. If anything, we are a resilient bunch. Both in business and as citizens. The question is, for how much longer?

Untreated, the symptoms will not go away.

The reality is business and industry is speaking with its feet, instead of voicing its opinion to government directly for creating a hostile investment environment that most certainly is not – contrary to official propoganda – open for business.

Kane-Berman writes:

“… though Trade and Industry Minister Rob Davies recently claimed
foreign investment was continuing to pour into the country, the latest Reserve Bank figures tell a different story — that, on present trends, the value of South African owned assets abroad will soon exceed the value of foreign-owned assets in this country.

Since 2007, the value of South African FDI held in other countries has grown 259% to reach R1,350bn in 2013. Overthe same period, the value of FDI held in SA by foreigners has grown only 78% to reach R1,596bn in 2013.

More than half-a-century ago, the ratio of the stock of FDI inside SA was seven times that of South African-owned direct investment abroad. The ratio is now 1.18 to 1.”

If we cannot see the terrifying truth in that statistic, there is no sustainable future for the SA economy.

Instead of using locally generated cash flows and profits to fund local expansion and job creation, business is clearly terrified about what lies ahead. Safer to use that money to invest in assets offshore that provide a natural hedge to any further SA downside risk, than use it for other more sensible means. In an age of uncertainty, that’s a risk a premium we’re all paying for.

Don’t expect the current account deficit to improve anytime soon, and remember coffee beans are priced in dollars. They won’t be getting cheaper. Not at home, nor in your corporate boardroom. Think about that when you have your next cup.