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HP Chairman Raymond Lane Steps Down

samzenpus posted about a year ago | from the so-long-farewell-auf-weidersehen-goodbye dept.

HP 89

First time accepted submitter gkndivebum writes "The latest casualty from the ill-fated acquisition of British company Autonomy by HP appears to be Raymond Lane, who was recently re-elected by only 58.8% of shareholders. Mr. Lane will remain on the board with shareholder Ralph Whitworth as interim chairman. It will be interesting to see where the 'evolution' of the board as articulated by Mr. Whitworth leads."

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89 comments

Butts and penises. (-1)

Anonymous Coward | about a year ago | (#43364509)

Butts and penises.

Re:Butts and penises. (0)

Anonymous Coward | about a year ago | (#43365105)

I'm pretty sure that's what caused one of the other executives to step down recently.

Re:Butts and penises. (0)

Anonymous Coward | about a year ago | (#43366057)

Microsoft, NYC Marketing Vast Surveillance System To Other Cities

More like Steve Ballmer watching you squirt.

Microsoft invested heavily in social media manipulation software so they could influence opinion on discussion sites and forums.

Being able to track so much community activity both on the web. and more directly via Windows telemetry, isn't just useful for their marketing sockpuppets. The information gathered on so many people becomes a product that can be sold as well. Now we see it's being traded, not just to other marketing organizations, but also to "law" enforcement types as well.

58% of the votes (5, Insightful)

rudy_wayne (414635) | about a year ago | (#43364515)

Raymond Lane, who was recently re-elected by only 58.8% of shareholders.

Winning an election with 58% of the vote is perfectly fine. Until you realize that he had no opponent. Just like elections in the old Soviet Union or other dictatorships, elections for most boards of directors are a complete fraud. If there is one seat open on the board, there is exactly one candidate.

Re:58% of the votes (1)

Shavano (2541114) | about a year ago | (#43364583)

Raymond Lane, who was recently re-elected by only 58.8% of shareholders.

Winning an election with 58% of the vote is perfectly fine. Until you realize that he had no opponent. Just like elections in the old Soviet Union or other dictatorships, elections for most boards of directors are a complete fraud. If there is one seat open on the board, there is exactly one candidate.

Not all board elections are run that way.

Re:58% of the votes (3, Funny)

turkeydance (1266624) | about a year ago | (#43364917)

Lane paves HP's path to a Kodak moment.

Re:58% of the votes (5, Insightful)

khallow (566160) | about a year ago | (#43365343)

Winning an election with 58% of the vote is perfectly fine. Until you realize that he had no opponent. Just like elections in the old Soviet Union or other dictatorships, elections for most boards of directors are a complete fraud.

Here's a challenge. Name any sitting dictatorship that won with only 58% of the vote. It's always a win with something like 99.7% of the vote.

There are two big differences here. First, he might not have won. If 4% of those votes had shifted against him, he would be out. That's assuming my understanding of the election system is correct.

Second, the reason he won was because he represented the interests of certain large shareholders who negotiated with other large shareholders in order to secure enough votes to elect him. As long as he continued to represent those interests faithfully, no matter how incompetent or corrupt he might appear to the outside world as a result, they'll continue to sponsor him.

Directors usually do not represent the interests of all shareholders, but the interests of a few large shareholders. That's what people don't get. There's no fraud here. It's just divergent and conflicting interests.

Re:58% of the votes (2)

maroberts (15852) | about a year ago | (#43366513)

Unless there was a ballot option to prevent Mr Lane being reelected, he didn't need a majority; technically a single vote would get him reelected.

To win an election you don't need a majority of the votes, you just need more than anyone else.

Re:58% of the votes (1)

dj245 (732906) | about a year ago | (#43368641)

Unless there was a ballot option to prevent Mr Lane being reelected, he didn't need a majority; technically a single vote would get him reelected.

To win an election you don't need a majority of the votes, you just need more than anyone else.

That is for regular elections for politicians and such. It is not how this kind of corporate election is run. Usually in these cases, all shareholders are assumed to vote for the incumbent or candidate unless they actually cast a ballot. If you own stock they send you a ballot to return with your choice. Getting 42% of the votes against this guy was actually quite an achievement, and there are probably a lot of people who didn't bother to vote who were counted as voting for him by default. It indicates that he is very unpopular. That is probably why he has stepped down (by choice or by pressure).

Re:58% of the votes (1)

RabidReindeer (2625839) | about a year ago | (#43367155)

Probably a more appropriate word than "fraud" would be "farce".

It's really amazing (and depressing) that a lot of blind apologists for corporations think that corporations are democracies. They're not, of course. And not just in the sense of "democratic republic".

Directors are elected Soviet-style, it's not one person one vote, it's one share one vote, and on top of everything else, if you don't vote at all, that usually gets counted as a "for" vote. At least in the Soviet Union you had to show up and cast your vote (emphasis on the word "had", though. With optional bayonets).

So it's unsurprising that he won the vote. Unless a fellow fat cat or raider has it in for you, you're pretty much guaranteed the seat. A 58% "for" count is more like a 13% in a truly democratic election.

Corporate hubris being what it is, though, his resignation is still noteworthy.

Re:58% of the votes (1)

DutchUncle (826473) | about a year ago | (#43372439)

One share one vote is democracy. In politics, each human counts, because each human has a stake; in business, each share counts, because you can have different stakes. (Of course, that doesn't count the electoral college etc.) It's the "default is you agree" instead of "no vote means no vote" that makes it autocratic.

Re:58% of the votes (1)

RabidReindeer (2625839) | about a year ago | (#43378373)

One share one vote is democracy. In politics, each human counts, because each human has a stake; in business, each share counts, because you can have different stakes. (Of course, that doesn't count the electoral college etc.) It's the "default is you agree" instead of "no vote means no vote" that makes it autocratic.

demo-
a combining form occurring in loanwords from Greek, where it meant “people” ( democratic ); on this model, used in the formation of compound words ( demography ).

So no. Feel free to find an equivalent term for "share-ocracy". My Greek doesn't extend that far.

Pedantry aside, however, what I was lamenting is that too many people think that corporate voting actually is a literal democratic vote and forget that not all people have the same number of shares. Or, for that matter, that all shares are directly owned by people.

Re:58% of the votes (1)

DutchUncle (826473) | about a year ago | (#43380275)

Or, for that matter, that all shares are directly owned by people.

OK, I'll grant you that it's not "demo"cracy, but I maintain my more general point that it IS an equal vote for an equal stake in the outcome, and as such is fair and open - perhaps fairer than the broken supposedly-democratic system in the US.

Your new point is also very important - the largest blocks of shares are *not* directly owned by people, but by mutual funds and retirement funds and things like that. Each individual person in that fund might have chosen to vote one way if they had control of their shares as personal holdings, but the fund managers may well vote the other way because (a) they feel differently (which might be why they got into the financial industry) and (b) even if they may *personally* agree with everyone else, their professional calculations tell them "the greatest profit is to hold our noses and vote for the thing we don't like" (which is some people's feeling about mutual funds in the first place - they can feel that their own hands are clean because they didn't make the harsh decisions that produced their dividends).

In Soviet Russia (1)

Roachie (2180772) | about a year ago | (#43364629)

HP steps on YOU!!!

Not the Board. (2, Funny)

Anonymous Coward | about a year ago | (#43364677)

At HP its actually Chairman of the Plank.

Needed to be done (4, Informative)

BBTaeKwonDo (1540945) | about a year ago | (#43364681)

Re:Needed to be done (3, Insightful)

Anonymous Coward | about a year ago | (#43365023)

The NY Times story says that Vanguard voted to reelect the entire slate of directors.

I'm a satisfied customer of Vanguard's and love their service for individual customers, but have to admit that they're part of the problem when it comes to wildly overpaid CEO's and entrenched board members. Simply put, the performance of individual corporations doesn't matter to mutual fund companies with indexed or broad based investing strategies like Vanguard - if they do better, then so do all their mutual fund competitors. So do the day traders. If they do worse, then so do their competitors. So Vanguard just sticks to its knitting and strives to keep its overhead as low as possible, rather than challenging the system that could bring in Leo Apotheker and give him an 8-digit compensation package with a severance package worth over $10 million, for less than a year's work.

We need more activist investors, preferably of the responsible kind rather than the greenmailing Carl Icahn model.

Re:Needed to be done (1)

Comrade Ogilvy (1719488) | about a year ago | (#43369857)

To be an activist is a labor intensive activity. If you do not own 10% of the outright company, the board might not listen, regardless of the merit of your arguments. The very low loads Vanguard prides itself on argues against making the attempt.

For the bigger funds, it is not practical to dump a stock simply because it is run by doofuses. The bigger funds are usually growing funds, they just opt to stop buying more stock in that company.

Competently run mutual funds have an idea of the price point where buying a company is attractive. That price point is virtual floor on the stock price. A board directors annoying the fund managers does not cause an ouster, but it does mean that floor where in the past the funds would step in and buy has dropped way down.

Re:Needed to be done (1)

khallow (566160) | about a year ago | (#43365393)

That's ignorant. The board of directors reflects the interests of the big shareholders such as Vanguard. Vanguard probably even has direct control over one of the members of the board. There we go [hp.com] . A Rajiv L. Gupta is a director of HP and of The Vanguard Group.

It's not magic how this works. Directors usually represent the interests of one or more large shareholders each and the large shareholders negotiate with each other to get enough votes for the entire board. The board got reelected because its purpose is to represent the interests of the large shareholders not to make decisions that appear competent to the outside world.

Re:Needed to be done (0)

Anonymous Coward | about a year ago | (#43365445)

Yes. Dumping Hurd and hiring Apotheker was one of the worst decisions HP has made in recent years.

Dont you mean he Jumps... (1)

Osgeld (1900440) | about a year ago | (#43364683)

Then floats down on a golden parachute while contributing nothing of value to the company?

Re:Dont you mean he Jumps... lead parachute (2)

chromaexcursion (2047080) | about a year ago | (#43365467)

Board members are not employees.
they leave. get nothing.
Frankly, for those people, they don't get paid much for being a board member either. For someone who makes over $100,000,000 a year. A job that pays $100,000 a day, but only pays for 4 days a year is a pittance. It's about power, and control.

Stepping down means admitting he's a loser!

Re:Dont you mean he Jumps... lead parachute (1)

Anonymous Coward | about a year ago | (#43365613)

No, the ones who are there for profit instead of for a personal or social goal such as saving mankind or reaching the moon, leave and step into another place where they can use the insider knowledge and "broker deals" to their personal advantage They can also clean up on insider knowledge spread among the boards of several companies they represent, passing the insider tips in trades so each board member can avoid trading their own company stocks directly.

If you think I'm kidding, try being a waitress at a restaurant in a business district. I was a busboy, and the amountof insider trading I could have done was.... frightening. I changed shifts because of the constant temptation.

Re:Dont you mean he Jumps... lead parachute (1)

tehcyder (746570) | about a year ago | (#43368957)

For someone who makes over $100,000,000 a year. A job that pays $100,000 a day, but only pays for 4 days a year is a pittance

Are there really that many people who earn over $100m a year? Seriously?

Anyone else remember? (5, Insightful)

inode_buddha (576844) | about a year ago | (#43364837)

Does anyone else remember when HP was run by engineers? I do. Back then, people wanted to buy their products and wanted to buy their stock. This is a direct hint to HP.

  Wish I had kept some of my old test gear, HP-201 audio generator, a spectrum analyzer, etc etc... still have the Tektronix scope tho. 50 years later and it still works fine. (used to do a lot of audio work)

Re:Anyone else remember? (1)

Shavano (2541114) | about a year ago | (#43364951)

It isn't even remotely the same company since they split off Agilent.

Re:Anyone else remember? (1)

inode_buddha (576844) | about a year ago | (#43365045)

The equipment I have is from before Agilent. I never had any respect for them, compared to the old HP. And yes it still works just fine. Getting harder to find tho.

Re:Anyone else remember? (2, Insightful)

Anonymous Coward | about a year ago | (#43365115)

The instrumentation division was the soul of the company and the wellspring of their technical excellence. They sold the soul of the company for money. Money which they squandered on Compaq and 3Com. There is a special circle of hell waiting for the management that went through with that sale and for those who didn't put a stop to it.

Re:Anyone else remember? (3, Insightful)

manu0601 (2221348) | about a year ago | (#43365103)

Does anyone else remember when HP was run by engineers?

I am not sure there is a company where transition from engineer lead to financial lead produced any benefit to the products. And bad products push companies in death spiral.

Management just for profit means destroying companies in the long term.

Re:Anyone else remember? (0)

Anonymous Coward | about a year ago | (#43366263)

Does that apply to countries too? China is mostly being led by engineers.

Re:Anyone else remember? (2)

Wildclaw (15718) | about a year ago | (#43366389)

Does that apply to countries too?

Of course. That is basically what Keynes pointed out.

Countries grow when their politicians care about reducing unemployment and putting workers to productive use. Countries stagnate when the politicians only care about the stock market looking good.

Re:Anyone else remember? (2)

Required Snark (1702878) | about a year ago | (#43366683)

Keynes was not the first by any means. Marx also observed how society is influenced by the rich and powerful so that they benefit at the expense of the "masses".

Marx was a pretty good observer, but he was horribly wrong when it came to effecting change. After the demise of Marxism, ideologues on the right effectively rewrote history so no one would question the intrinsic failings of predatory capitalism. They falsely claimed that since the left was defeated capitalism had no flaws.

In the US, the regulation of business that started with Teddy Roosevelt, and was extended after the Great Depression, was dismantled starting with Ronald Regan. From the end of WW2 until the mid 1980's the US economic system benefited all levels of society.

Since then we've evolved into a system that transfers wealth from the vast bulk of the population to the ultra wealthy. It's not the 99% vs the 1%, it's the 99.998% vs the 0.002%. Our economic and political life revolves around the fractional billionaires. If your net worth is $100 million or more (i.e. $0.1 Billion plus) then you have an effective guarantee of unlimited future wealth for you and your decedents.

This is exactly the scenario that Marx observed at the end of the 19th century. H.G. Wells saw it as the Eloi vs. the Morlocks. In Fritz Lang's Metropolis there are the owners vs the dehumanized workers.

If the current trend continues then the US will become like the rest of the Western hemisphere. (Sorry Canada, you fate is not in your own hands.) We will oscillate between repressive inefficient right wing governments and repressive inefficient left wing governments. A choice between Argentina's Pinochet and Venezuela's Hugo Chavez. Imagin Orwell's 1984 as a popular weekly TV show, or A Clockwork Orange, to continue the literary references.

Re:Anyone else remember? (1)

Ateocinico (32734) | about a year ago | (#43367547)

As a Venezuelan, and descendant of Spaniard republican refugees, I can not agree more with you. But Pinochet was Chilean. As a child I had to suffer Chile's madness and as a grown up Venezuela's dive in to social schizophrenia. So, IMHO, what happens with HP's board of directors, is a small version of the group irrationality and a consequence of still unknown forces (chaos?). As you say, we have good descriptions but we don't know what is really going on.

Re:Anyone else remember? (1)

Alioth (221270) | about a year ago | (#43368361)

Pinochet was from Chile.

Re:Anyone else remember? (1)

tehcyder (746570) | about a year ago | (#43368999)

Venezuela and Hugo Chavez might not be perfect, but they're a fuck of a lot better than they were before. Unless you were working for an oil company, I suppose.

Re:Anyone else remember? (0)

Anonymous Coward | about a year ago | (#43369079)

"as dismantled starting with Ronald Regan. From the end of WW2 until the mid 1980's the US economic system benefited all levels of society"

Are you serious with this?

Look at the state we are in now and you try and blame the conservative?

Do some homework citizen, I won't do it for you, you won't believe me anyway. Look up the FACTS.

Re:Anyone else remember? (1)

manu0601 (2221348) | about a year ago | (#43375523)

Marx was a pretty good observer, but he was horribly wrong when it came to effecting change

I came to that exact same conclusion, that Marx gives us great concepts to understand the situation, but proposed bad solutions : Dictatorship of proletariat replaces oppression by another oppression. It cannot bring a legitimate power. And socialization of the means of production by the state means the state must organize everything, which pushes again toward oppression.

However, Marx still has many things to tell us. When people talk about the 1%, this is marxism reinvented

Re:Anyone else remember? (0)

Anonymous Coward | about a year ago | (#43366845)

Does anyone else remember when HP was run by engineers?

I am not sure there is a company where transition from engineer lead to financial lead produced any benefit to the products. And bad products push companies in death spiral.

Management just for profit means destroying companies in the long term.

Going from engineer led to finance led is not the only option. The modern reincarnation of Apple fx is decidedly marketing led, not engineer led. (for a broader definition of marketing responsibility than geeks who think that marketing=advertising)

Re:Anyone else remember? (1)

Anonymous Coward | about a year ago | (#43367423)

Pure engineer view leads to products that can do impossible things, but are hard to use and look bad( Nokia anyone? ). Pure marketing leads to products that look good, are easy to use, easy to sell, but don't really do anything right ( iPhone, i'm looking at you ). Pure bean counters will keep doing the last thing the company did and do it better, faster, cheaper, with more profits. For a while, or untill competition kills them off with new products.

Re:Anyone else remember? (1)

tlhIngan (30335) | about a year ago | (#43368797)

Pure engineer view leads to products that can do impossible things, but are hard to use and look bad( Nokia anyone? ). Pure marketing leads to products that look good, are easy to use, easy to sell, but don't really do anything right ( iPhone, i'm looking at you ). Pure bean counters will keep doing the last thing the company did and do it better, faster, cheaper, with more profits. For a while, or untill competition kills them off with new products.

Except that pure marketing won't get you beyond the first step.

Just like pure engineering won't get you beyond the first step as well.

Because we have this thing called "feedback" - if the product is pure crap and only sells due to marketing, it'll come out pretty damn quick (see any overhyped movie) and sales will falter.

Likewise, anything that's hard to use will be noted as such "great product, but you must put time into learning how it works. As it is, it isn't recommended".

Nokias had great hardware, but the software did stink. However, unlike many Japanese cellphones, they were still usable phones. iPhones likewise - if it really was pure marketing hype and didn't work, then sales would've collapsed a few weeks after release in 2007 (think of the headlines - "Apple's iPhone - all flash, no substance").

Though, one aspect to consider is that engineers in general don't consider the arts side as being very important - designers, marketing, sales are all undervalued by engineers as frills.

Designers serve to make their lives difficult by insisting on buttons being like this and that order and having this sort of flow, etc - just let me code it my way. Marketing - that's spamming and exist only to sell you crap you don't want - my product is so good people will want it instantly (failing to note that if the public doesn't know about it, they won't discover it). Sales - they just exist to sell crap that doesn't exist and make onerous demands on engineering teams.

On the flip side, most of those people DO realize that engineering is required, though a bit more universally is they underestimate the effort involved. Of course, communications is generally the issue - the better the arts side can interact with engineering (so sales and marketing better understand what the product is, what it does, and other things, including what customers and needs it can fulfill), the better the overall result.

Re:Anyone else remember? (1)

oldlurker (2502506) | about a year ago | (#43370043)

Agree with much of what you are saying. Except that I think you do have too narrow definition of marketing. In product marketing, collecting user and market feedback, market requirements, identify opportunities and guide engineering in designing the product and UX *is* part of the responsibility in many organizations. I agree with the parent who said that iPhone was designed by marketing (and by designed I don't only mean the pretty looks) and that Apple is run by marketing, including the products.

Re:Anyone else remember? (1)

Rich0 (548339) | about a year ago | (#43366991)

I am not sure there is a company where transition from engineer lead to financial lead produced any benefit to the products. And bad products push companies in death spiral.

Yup, but the average stock analyst doesn't really understand how to make products, but they certainly understand MBA-speak.

That's the problem with most big US corporations. Sure, MBAs have a valuable role in a company, but they're aren't the ones that create wealth. The most they can really accomplish is improving efficiency. Well, companies don't become great by being efficient - they become great by delivering a product people want to buy. Sometimes efficiency is a part of that product (Walmart, Amazon, etc), but you first have to have some kind of product that people want to buy.

The other big problem is lazy executives. At work when they apply Six Sigma to a problem they tell people to just think of a half dozen CTQs (quality attributes to optimize). The problem is that they will then apply that methodology to some really big process that has many outputs and which many other processes depend on and there really are more than a dozen things that matter. But, it is hard to do statistical analysis when you have 47 variables so everything gets oversimplified. The result is that you get new efficient processes that simply neglect things that are important, and down the road you start having quality problems because when you're making something complicated you really need to have good control over every step along the way. But, executives don't want to think about complex processes with complex outputs - they want a powerpoint slide with 6 bullet points on it, and they want to hear that the six things that really matter can be delivered just as well at half the cost.

Re:Anyone else remember? (1)

roman_mir (125474) | about a year ago | (#43367073)

Management just for profit means destroying companies in the long term.

- management should be just for profit, companies exist to generate profit, if they don't, they should be liquidated.

The problem with HP and with so many other companies is that they are not for profit themselves, they are part of the financial shell game played by government money printers. What some call 'unsustainable growth expectation' really is an attempt at getting some profit above the real inflation rate and the real inflation rate is very high, so what do you expect a company to do to cover the costs, including all the costs increases due to inflation and to generate profit on the investment that covers inflation and provides some form of a return that is at least somewhat meaningful (people expect at least 5-6% on their return above inflation).

So if inflation rates are really at the minimum between 5% and 10%, then you have to look for a minimum of 10% to 16% profit margin a year to provide a real return of 5-6%

Except for that obviously the entire shenanigans that the governments are engaged in with the death taxes create a long term impossible situation for a company to be managed with a long term vision.

What long term vision is there for a company that really doesn't have an actual owner? Death taxes cause people to liquidate to pay the taxes (or to find ways to avoid paying taxes) and so even the original creators of the business are not long term oriented, they want to build something and to get rid of it as quickly as they can get a good enough offer. Who comes up with good enough offers? Large conglomerates do, funds of some sort. Are they there for the long term business prospect of that particular business?

No, they are there to maximise efficiency, to use the company in any way at all to make more money, and that's FINE, but it doesn't allow a company to have a long term future.

So as always, death and taxes (and inflation) is what causes companies not to be managed by people who care about that particular business. The kids of the original creators don't manage it.

OTOH look at Walmart. Sam was able to leave his company to his kids without having to liquidate most of it somehow, so his family is running it and quite profitably.

Re:Anyone else remember? (1)

manu0601 (2221348) | about a year ago | (#43376281)

- management should be just for profit, companies exist to generate profit, if they don't, they should be liquidated

A company can have a positive income, reinvest everything and make zero profit. There is no reason why it should be liquidated for such a situation. Of course shareholders would be unhappy — except if the shareholders are the company employees themselves, because they have already been paid through salaries.

Re:Anyone else remember? (1)

roman_mir (125474) | about a year ago | (#43377151)

zero profit means zero development, zero re-investment and no return at all.

If you are going to build a business, invest in it (as for example you imply equal share employees would in this case), why would you want your money to be stuck in a zero profit place, which clearly means you are losing money due to government created inflation? Why wouldn't you rather invest in a business that actually made profits? If you are vested in a business you want it to grow, to become more efficient.

If you can't make profit one, two, three years, that's one thing. If can't make profit by your year five, you are doing it wrong. You are not looking for any efficiencies, you are not looking for ways to reduce costs. Why aren't you? Why are you not changing your technology, why aren't you changing the way you are doing things to lower the costs to allow for profits? You are going to be outcompeted by somebody else, who will have profits, grow, improve quality because of profits and will kick you out of your niche and you will lose your original investment and you will have gained nothing.

What do you have by the end? A few years of work without profits, a lost investment and lost opportunity? Would you really want that?

Re:Anyone else remember? (1)

manu0601 (2221348) | about a year ago | (#43377675)

You missed my point. When employees are the only shareholders, making zero shareholder profit is fine, since they have already been paid by salaries.

Re:Anyone else remember? (1)

roman_mir (125474) | about a year ago | (#43377727)

NO, I do not miss your point. The salaries are based on their original investment, which they had to provide in order to have that business. You are saying they are the equal shareholders, so they put together the company.

No company survives if it does not make profit, that's the simple answer. A company that does not make profit and just covers its costs and is always kept at 0 is a company that will be outcompeted by some other company.

What do you think a business owner does with the return on his investment? The more substantial is the return, the less of it he consumes and the more of it he reinvests. In fact your proposition means that the company is completely static.

How can a company be static? People move, some people want their money out, some new people want to come in. Then there are others, who see that a company that like exists and it's not even attempting to reduce costs but it's not going out of business, so obviously there is space for improvement. There is always a way to reduce costs (that's why the sequester nonsense is so stupid, if in the private sector revenues are cut because of an economic slow down, the company finds ways to keep working, but gov't can't even imagine a situation like that).

A profit is also a buffer that allows a company to survive in the bad years, it creates a rainy day fund. A company that ends a year in an exactly same position that it started a year with is faced with all these problems: higher costs due to inflation, and so it will have less capacity next year, it has new competition that enters the market because it sees an inefficient company.

That company cannot expand its scale, so it can't in fact lower the prices. A company can lower prices to getting better deals on supplies when it buys more of them in bulk. That's why WM can outcompete other smaller chains, it buys in bulk. It can only buy in bulk because it's big. It only grew to become big (and it's still growing) because it invested every year.

You can only invest what you saved (or borrowed of-course, but borrowing also implies you will have to turn up profits to pay the loan back and obviously the interest rate).

A company that does not do anything to lower its costs and to scale up is a company that will be removed from business, there will be a take over one way or another, a restructuring company will come up with money and will force a sale one way or another.

One way to force a business to fail is to invest in a much more efficient competitor and then to beat the failing business in the market and then the failing business will have to sell or it will grind down, go bankrupt.

Basically there is no way to run an unprofitable business for too long, it will be removed from the market as something inefficient. Only a government can run an unprofitable business, that's what governments do when they create monopoly laws that prevent competition, fix prices, fix costs, all this nonsense, but then the market suffers. The customers suffer, the clients suffer. They become a captive audience and the gov't monopoly introduces inefficiencies that force people to pay higher prices for something that could be done much cheaper, so this is part of the economic destruction all governments are culpable of.

Re:Anyone else remember? (1)

manu0601 (2221348) | about a year ago | (#43378075)

What do you think a business owner does with the return on his investment? The more substantial is the return, the less of it he consumes and the more of it he reinvests.

A company can reinvest its profits, but once it is given to shareholders, nothing forces the investor to reinvest within the same company

There is always a way to reduce costs

And most of the time this involves decreasing salaries or making employees working more to produce the same wealth. I suggest an alternative, which is to destroy shareholders profits. And I introduced you with the employees ownership that makes it possible. Some kind of marxism-enabled capitalism (or is it capitalism-ware marxism?)

A profit is also a buffer that allows a company to survive in the bad years

No problem with that.

Re:Anyone else remember? (1)

roman_mir (125474) | about a year ago | (#43378263)

A company can reinvest its profits, but once it is given to shareholders, nothing forces the investor to reinvest within the same company

- why should something force somebody to do anything?

Besides, if a company provides a good return on investment compared to other businesses, why wouldn't an investor prefer that company (except for being diligent of-course and not putting all eggs into one basket, haven't you learnt to do that yet?)

And most of the time this involves decreasing salaries or making employees working more to produce the same wealth.

- IF a company can manage to do this in the free market then it is a GOOD thing.

All goods, services, input costs, land, capital, labour, all of these have their price.

Price of capital is the relation of time preferences to the capital holder and to the borrower (interest on a loan).

Price of labour is not dictated by a company, it's a negotiation process between company and labourers. If a company can reduce its costs by shifting labour requirements to some other region and still remain viable in the market it absolutely should do that.

The purpose of a company is not to provide anybody with employment opportunities, the purpose of a company is to create a meaningful return on investment. Buying labour is just a side effect of that goal, if a company can use capital to automate every procedure and lower costs of input that way it absolutely should do it.

Let me give you an example:

I used to work as a contractor for a long time, back in 2001-2004 I worked for a check processing company that belonged to a number of banks. A couple of my projects there was to reduce the cost of finding a record of a check or of a statement. The records were stored on microfiche and microfilm tapes. These were placed into boxes and onto shelves. At first we optimised the search algorithm to reduce amount of time that it took for a person to find the records. We even introduced better scanners at some point to do the job faster (so a person would put a fiche or a film into a scanner and search for the record).

Eventually we shifted away from keeping records that way entirely and moved to full computer storage with large data banks of harddrives and specialty robots that would move harddrives from readers into storage, etc. This became possible once an investment was also made into very quick scanners, that scanned up to 1000 checks per second (on both sides), they are like conveyor belt with fast cameras.

Do you see where I am going? Over years between 4500 and 8000 people lost their jobs. It was a GOOD THING.

It was a good thing for the society and economy to free that labour to do something else, more productive than this, and this became automated and now banks are using this architecture to show you pictures of checks and statements online very quickly.

So that just freed the labour with labour saving devices and allowed the people to be employed by somebody else likely at a LOWER PRICE (unless they managed to find a better paying position, probably some of the people who worked there saw a salary cut when they found other employment.) That's because they added to the supply of labour in the labour market.

This allowed other companies to choose employees from a larger supply pool, and that means that many companies could hire more people where they couldn't before at lower prices.

IF the government didn't inflate money supply, the society would be gaining in many ways here that are even more obvious: the price for retrieving images of paper records was crushed basically, so these costs went down.

Cheaper labour became available, allowing other companies to hire at lower prices and thus allowing more efficiencies across the entire economy. So while some people had to change jobs, the entire economy had a boost because it became so much cheaper to do that specific task and the people became available to companies with less capital at hand to do something else, where that labour could be used much more efficiently than it ever could again at their former employer.

It's a gain gain gain situation, even the people that had to lose their positions at the check processor now had lower costs of retrieving their check data and at the same time they would have more goods available to them at lower prices because 4500 to 8000 others, just like them started working for other companies, causing more efficiencies and more goods and services to be produced.

Again, if gov't wasn't printing money to destroy the value of a single currency unit, the gains would stay with every single person in the economy without them even doing anything, their money would gain value just because the ENTIRE economy became much more efficient.

Falling prices is a good thing.

Once again: falling prices is a good thing including falling prices on labour. Falling prices on labour means falling input costs to business, which produces things we all want and need and so we have to pay less for those things and that's what "trickle down economics" actually means, not the nonsense that is being assigned to it by the politicians and the uneducated mob.

I suggest an alternative, which is to destroy shareholders profits.

- you are simply suggesting to destroy the economy, nothing else. You are suggesting to destroy incentives to start/grow/invest into a business.

Why would anybody save and provide their savings as loans to willing participants in the market, people who want to try and start a new business and create new products and services (and obviously hire others to do it) if they couldn't get a return on their investment?

You are suggesting economic shut down.

And I introduced you with the employees ownership that makes it possible.

- you are mistaken. Even if 90% of population agreed with you, the 10% that continued to work for profits would completely annihilate every attempt at such nonsensical behaviour by introducing efficiencies, which translate to LOWER PRICES and MORE CHOICE.

What do you think wins in the market? Higher prices and fewer choices or lower prices and more choices?

Cue Jeopardy music for 30 seconds right here. ..ta da da da, ta da daaaa, taa ta taa ta taa ta taa ta ta ta.....

Some kind of marxism-enabled capitalism (or is it capitalism-ware marxism?)

- why?

Why would anybody want to do that to themselves?

Basically you are asking people NOT to attempt and grow their own prosperity as a favour to you for some reason. I know on which side you'd find me in that situation.

Re:Anyone else remember? (1)

manu0601 (2221348) | about a year ago | (#43379043)

There are too many points in your message, I will only reply on the most important one IMO

- why should something force somebody to do anything?

For the sake of the general interest. For instance, you are not allowed to dump your garbage wherever you want because this is an annoyance to other people. When free market means a nuisance for 99% of the population, then regulation is legitimate.

- IF a company can manage to do this in the free market then it is a GOOD thing. (...) Price of labour is not dictated by a company, it's a negotiation process between company and labourers.

Negotiation between companies and many workers is asymetrical, you know that very well. Minimum wage is a regulation on free market for rebalancing powers between companies and workers. This defends workers, but it also benefits the whole economy: each company has an incentive to reduce wages in order to lower costs and be competitive. But if workers are too poor, they do not consume anymore and the economy slows down, hurting all companies. Minimum wage is supposed (if high enough) to avoid that situation.

Re:Anyone else remember? (1)

roman_mir (125474) | about a year ago | (#43379327)

For the sake of the general interest

- the only legitimate 'general interest' is the interest that arises spontaneously and voluntarily in the market. You are bringing up concept of 'collective good', which is exactly the concept used by all dictatorial powers, regardless what precise ideology they subscribe to, they are collectivist in the message, they are anti-individualist, anti-humanist, anti-capitalist, anti-free market (which means they are against sound economics and rule of law).

Your goals cannot be noble if your means are not noble, that's an important point. If you have goals that you cannot achieve without using power of the collective, so this means violence as the means, then your goals are wrong, immoral and are not productive in the long run anyway.

For instance, you are not allowed to dump your garbage wherever you want because this is an annoyance to other people. When free market means a nuisance for 99% of the population, then regulation is legitimate.

- this is a common misconception, which I addressed enough times (in enough detail if you go even only through one thread) [slashdot.org] not to have to repeat myself here. Private property rights prevent this and 'common ownership', which means no ownership at all but abuse of property without an owner is what causes it.

Negotiation between companies and many workers is asymetrical, you know that very well.

- I am only interested in the cheapest prices, highest quality and most choices in the market, I WANT low prices and I particularly do not care how a company does it as long as it is not enjoying some form of gov't protection.

Employees sell their labour, their time, their skills, their experience to employers. It's a market like all others, like a bread market, like a car market, doesn't matter. I want employers and employees to find their own price points that are most profitable for the entire economy, which means for me, and this means I want prices to fall, not to rise, including labour prices. Of-course this requires gov't to get out of money business and to stop inflation via money printing.

Minimum wage is a regulation on free market for rebalancing powers between companies and workers.

- again, I do not find it useful in any way shape or form that a gov't forces MY prices to go up because of any laws, including minimum wage laws. I do not find it useful that gov't causes unemployment by preventing willing market participants (employers and employees) coming together at mutually beneficial agreements and finding ways to satisfy my customer demand for low prices, quality and choices.

I want prices to go as low as possible, this is what 'trickle down economics' is all about - the CUSTOMER gaining purchasing power by having to pay less and less for products he or she buys. That's all I care about, I don't care about specifics of how it is done again, as long as it is done without any artificial power being used to create higher prices than otherwise would spontaneously arise in the market.

All manipulation of prices removes efficiencies, raises prices, lowers quality and destroys my well being.

This defends workers

- nonsense, it hurts workers by preventing them from having employment in many cases, especially low skilled workers who have to compete in a market of reduced choices, because many employers have their price points and just like a person doesn't buy another car because it is too expensive, an employer doesn't hire another employee, because gov't makes it prohibitively expensive to do so.

but it also benefits the whole economy

- nonsense, the entire economy suffers higher prices, lower quality, less efficient distribution of resources, more intrusion of ever growing gov't power. The entire economy suffers from not having resources allocated as efficiently as the market can and this includes people who are out of work because of it, it includes products that cannot be produced because of it.

It means people that otherwise would have employment opportunities and opportunities of growth of building up experience will not have those opportunities. It means a growth of the dependent class, and this means growth of gov't power, which creates this problem and then comes up with "solutions", which include more government.

More taxes, more 'welfare' programs. Welfare in quotes, because in reality there is nothing more damaging to the overall economy than 'welfare' programs created by government on the backs of the actual real economy.

each company has an incentive to reduce wages in order to lower costs and be competitive.

- we want all wages to be stable or to be reduced, which are just prices, and we want all goods to cost the same or less next year than they do today.

But if workers are too poor

- not because of falling prices on their labour in a deflationary economy, which means falling prices on all consumer goods. Workers are poor when they cannot find work, they are prevented from working, they have to compete against higher paying jobs rather than being able to take a job that would allow them to enter the labour force and to develop skills to be able to get higher paying jobs down the line.

Workers are made poor by a 'welfare' society, which means society of mis-allocated resources, society of never falling prices, society of ever inflated money supply and ever growing government.

they do not consume anymore and the economy slows down

- workers cannot consume unless they produce and your proposal is to make them produce less by creating artificial barriers to entry for the workers into the labour force.

You are proposing reduction in working output by creating artificial barriers to the workers actually getting jobs and by creating artificial price controls that prevent companies from turning up enough profit to reinvest and grow and thus increase supply.

Workers are not poor because they make little amount of money, workers are poor because there is nothing to buy at their price points, and that is the result of higher prices that you are advocating for, which result from artificially created economic imbalances that you promote.

hurting all companies.

- companies are hurt when they are not allowed to hire the help they need at prices points they can afford to turn up profit and to grow, companies are NOT hurt by lower input prices, they ARE hurt by higher input prices, by inflation (money printing), by 0% interest rates (impossible to get credit thanks to gov't, the crowding out effect).

Minimum wage is supposed (if high enough) to avoid that situation.

- ha ha, minimum wage is destructive to the entire market, it doesn't prevent poverty, it creates poverty by creating artificial barriers to wealth generation.

Re:Anyone else remember? (1)

roman_mir (125474) | about a year ago | (#43379367)

Oh and by the way, this:

There are too many points in your message

- there is only one message: individual freedom.

Your message is slavery by the collective.

Individual freedom is what I want, I want people to be able to succeed because of their ability to invest and work, I want them to succeed to their maximum potential, I want them to become as wealthy doing it as they humanly can.

I want the people who do not engage in business themselves to be able to access the majority of goods and services at lowest prices that a free economy can provide.

That's all I am talking about, nothing else. I don't want anything at all from a collective that uses violence against an individual to force him into something he is not interested in doing, I want everything from a collective that promotes individual freedom.

Re:Anyone else remember? (1)

manu0601 (2221348) | about a year ago | (#43379889)

- there is only one message: individual freedom.

Your message is slavery by the collective.

Do you now French Republic motto? Liberté, egalité, fraternité. It is the key to go beyond the opposition between individual freedom and collective oppression.

  • Liberté (freedom) is desirable. But complete freedom means one is allowed to hurt others, and it let a small number oppress the others, therefore it should be limited
  • Egalité (equality) among citizen is desirable. But as you noted, seeking complete equality is oppression, therefore it should be limted.
  • Fraternité was added to balance the apparently contradictory freedom and equality. This is where the general interest comes.

But I can admit you see no point in fraternité, and that you want a country to be just a free trade zone between individuals with a government to guarantee private property (Ummm, is private property enforcement by the government really free market?). This is the country and government without the nation, I can understand this is what you desire.

However we recently saw a new form of the general interest: there is a single ecosystem allowing human life, and therefore there is a general interest, and this is another reason to restrict your freedom.

Re:Anyone else remember? (2)

roman_mir (125474) | about a year ago | (#43380057)

Do you now French Republic motto

- I know it, I visit France once in a while. This motto can be understood properly if translated from the Orwellian doublespeak into human language this way:

Liberté - entitlement to products and services that others are forced to provide to the mob. This really means entitlement for some and legalised theft with the violence of the State to provide this subsidy.

Egalité - discrimination against some to achieve supposed 'equality' for others. You can't achieve equality of outcomes if you don't discriminate against specific individuals in specific ways. You can't have equality of outcomes because you start with unequal premises, even the basics, like human physiology is unequal, never mind other properties.

Fraternité - class warfare, which is the justification for State legalised violence to achieve the discrimination to provide the entitlement.

Ummm, is private property enforcement by the government really free market?

- equality under law to have equal rights protected equally for all individuals.

This is the opposite of the class warfare in that French cry to arms.

As to 'restricting my freedom' because of 'single ecosystem', you are wrong to think that you will achieve that goal also. What you are advocating will produce the exact opposite effect, it will hurt the ecosystem more than individual freedom, in fact individual freedom results in wealth creation and it takes wealthy individuals and thus a wealthy society to be able to take care of the ecosystem.

From what I gather, the only 'solutions' that Marxists (collectivists) of all colours are proposing is control over humans, even control over entire populations.

Is life on this planet so important, that we must force people to live through it in chains of the collective?

I argue that liberty and freedom is more important than anything and that it provides the long term solutions to the problems that arise due to increase in population and various technological problems.

Anyway, I am not sure that this was of any use to you.

Cheers.

Re:Anyone else remember? (1)

manu0601 (2221348) | about a year ago | (#43382517)

This motto can be understood properly if translated from the Orwellian doublespeak into human language(...) Fraternité - class warfare

I think you miss something by interpreting french republic motto while looking at today's France political situation, while it has to be understood within the context of its inception. This makes you stretch a lot enlightenment thinking, which led to the motto, in order to serve your point. Class warefare is a valuable marxist concept, but by using it there, you use Marx to reinterpret Rousseau, while the former did not read the later, and kept power legitimacy in a blind spot just because of that.

Let me take another example: do you see class warefare there?

All human beings are born free and equal in dignity and rights.They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood. (Universal Declaration on Human Rights, article 1)

Re:Anyone else remember? (1)

roman_mir (125474) | about a year ago | (#43382905)

I think you miss something by interpreting french republic motto while looking at today's France political situation, while it has to be understood within the context of its inception.

- actually it's not me, you missed something if you are going to use the original idea behind that cry to arms.

If you are talking about the original, then you missed the last part: ou la mort.

I am obviously using the modern understanding of that slogan and that's what the modern understanding is:

Welfare entitlement, discrimination, class warfare. Actually I would return the original part about death as well.

Re:Anyone else remember? (1)

manu0601 (2221348) | about a year ago | (#43387483)

I am obviously using the modern understanding of that slogan and that's what the modern understanding is:

And this is just not what I was talking about. In other words, you are unwilling or unable to consider my point. But I can try another way: what is a nation for you?

Re:Anyone else remember? (2)

roman_mir (125474) | about a year ago | (#43391407)

Are you talking about this:

Let me take another example: do you see class warefare there?

All human beings are born free and equal in dignity and rights.They are endowed with reason and conscience and should act towards one another in a spirit of brotherhood. (Universal Declaration on Human Rights, article 1)

What do I see in this?

There are 2 versions of what I see based on the definition of what a 'right' is and what 'equal' means.

AFAIC a right is protection against government abuse of an individual, nothing else. So a right to private property is protection of individual's private property against claims by the collective.

'Equal' means equal before law without the law treating some people differently than others, so equal treatment by government without discrimination.

So if you take my definition of what a right is and what 'equal' means, then that sentence means the following:

All human beings are born as free individuals and cannot be coerced by government or the collective and they have equal rights before law, where the law is defined clearly and is applied equally to all people regardless of their personal circumstances.

The part about 'brotherhood' only means to me: do onto others as you would want others to do to you.

--

If you take the common (majority opinion) misconceptions and apply them to the definitions of 'right', 'equal' and 'brotherhood', then you are going to get a different meaning altogether.

A right then means an entitlement to be provided for by the collective certain goods and services, which forces an obligation on the collective to provide them somehow (so this gives the collective power over the individual to force an individual to give up his labour one way or another, thus the idea of income taxes, which I see as a tax on slaves, not on free individuals. The collective says that it owns the individual and all he can produce and the collective just chooses not to take 100% of what the individual produces and that is only because it's impossible to take 100% and not prevent individual from producing in the first place. This means that an individual doesn't have rights.)

'Equal' in this case means equal outcomes, which necessarily requires discrimination against individuals based on their personal circumstances, so this is where such notions as 'social justice' come from, which are completely Orwellian in nature, obviously there is no justice if it's not applied equally and to achieve equal outcomes the collective must treat people differently based on their different circumstances, thus this is discrimination against some for the benefit of others. Again, this is an approach to slaves, not to free individuals.

'Brotherhood' in this case really means class warfare, 'us vs them', you are either 'with us' or you are 'against us'. It's a common way to use that word around the world, it's a tribal notion, not a notion of abstract idea that you should treat people as you would want them to treat you.

In that case the sentence becomes:

All human beings are born with certain entitlements and the collective has the obligation to provide those by using the threat of collective violence against humans. The discrimination will be applied selectively based on different individual circumstances and the majority belong to a 'brotherhood' of sorts, which ensures that the collective follows this goal of discrimination, theft, slavery and violence to create the subsidy.

--

Is this what you are asking me?

--

As to what a 'nation' is, it's a set of people found in close territorial proximity from each other, probably sharing some common traits, such as language and sharing some form of common government.

Re:Anyone else remember? (1)

rhodium_mir (2876919) | about a year ago | (#43395913)

True equality under the law would mean everyone having equal non-exclusive rights to all property. The only true property rights that exist are those which are backed by force. Government protecting "your" property effectively makes it their property, which is indistinguishable from communism.

Re:Anyone else remember? (1)

manu0601 (2221348) | about a year ago | (#43409029)

AFAIC a right is protection against government abuse of an individual, nothing else.

Does that means you take position against inheritance rights? Let us imagine the state takes all your belongings after you death, leaving nothing for your children. You are not abused since you are no more. Your children are not abused since that wealth were not theirs. I do not advocate for such an extreme inheritance regime, but I wonder how your narrow definition of right will fit here.

The part about 'brotherhood' only means to me: do onto others as you would want others to do to you.

At least! This means you agree that means there is a limit to your freedom, right?

As to what a 'nation' is, it's a set of people found in close territorial proximity from each other

You are confusing the country and the nation. Come on, try harder.

Re:Anyone else remember? (1)

roman_mir (125474) | about a year ago | (#43410199)

Does that means you take position against inheritance rights?

- the owner of property is in his right to transfer his property to whoever he sees fit, at that point the property (like in all other transactions) belongs to the people who are now in possession of that property.

In fact if you read this comment of mine [slashdot.org] , you will see that I think that the problem with short term thinking in companies is that they have no owners and the large part of that problem is created by death taxes (and inflation of-course, which is also theft of property, of savings).

At least! This means you agree that means there is a limit to your freedom, right?

- you mean that I cannot murder somebody because I wouldn't want somebody else to murder you?

That's criminal code, we don't need central government to set it up, never needed it. We don't need government at all to follow such simple concepts. We don't even need formal criminal law to understand it. It doesn't limit my rights, my right to swing my fists stops at your nose, where your right to your private property start (your nose, it's your private property unless I am mistaken and you loaned it out or sold it to somebody else).

You are confusing the country and the nation. Come on, try harder.

- that's my definition, you don't like it I can't help you.

Re:Anyone else remember? (1)

manu0601 (2221348) | about a year ago | (#43409063)

individual freedom results in wealth creation and it takes wealthy individuals and thus a wealthy society to be able to take care of the ecosystem.

This seemed to me so obviously wrong that I did reply at that time, but since I have a few minutes this morning: A quick search on your favorite search engine will show a correlation between a country wealth and its impact on the ecosystem. Take greenhouse gas emissions vs GDP, for instance, the correlation is quite good.

There should be no surprise there, since free market does not take into account the negative impact on the ecosystem. Economic actors have no interest of taking care of it.

Re:Anyone else remember? (1)

nebosuke (1012041) | about a year ago | (#43368789)

Management just for profit means destroying companies in the long term.

Management for profit is a simple requirement for company survival--all it means is that you manage the enterprise such that the value that it is able to generate and capture as a result of its operations exceeds its share of the cost burden of its operations. You're conflating sacrificing long-term viability for short-term gains with management for profit, or perhaps confusing managing for what is profitable for specific individuals with what is profitable for the corporation.

That being said, there are several broad strategies for increasing profit:

  1. 1) Increase total value generated. E.g., Facebook improving its service or expanding the scope of its service.
  2. 2) Increase captured share of value generated. E.g., Facebook 'monetizing' the value generated by the social graph--people already use it to conduct trade, advertise, etc. Facebook just wants a bigger cut of the action.
  3. 3) Reduce total cost burden of the operation. E.g., Facebook improving energy efficiency of its data centers.
  4. 4) Reduce share of total cost burden borne by the operation. E.g., Facebook lobbying governments to subsidize its operations with various tax breaks etc.

Variations or specific implementations of the above strategies may be unethical, risky, etc. (e.g., strategy 2 can damage your reputation and actually result in reduced value generated overall, or strategy 4 might result in a backlash from the groups that had to absorb the externalized cost of your operation), but all are at least intended to improve the probability of survival of the corporation.

Re:Anyone else remember? (1)

DutchUncle (826473) | about a year ago | (#43372647)

Management just for profit means destroying companies in the long term.

Management for profit is a simple requirement for company survival . . .

Three posters missed the point - JUST for profit. Agreed, of course a company must profit to survive. Remember, though, the heyday of Japanese growth two or three decades ago, when people pointed out that Japanese companies would trade profit to get market share, and Japanese executives and politicians would all speak of the longer term position in their industries.

MBAs want to make more profit NOW. Not just this quarter, or this month, but NOW. And they don't care if it's only on paper, or only stealing sales figures from tomorrow. They will play a shell game to look better in the short run without producing anything.

Engineers want to make a better product that will make profit by being better and selling better and beating the competition. Then you make it more efficiently and save money at the same time as you beat the competition harder. That improves industries. Unfortunately we're not doing it as much in the US, and the MBAs are in charge.

Re:Anyone else remember? (1)

nebosuke (1012041) | about a year ago | (#43373873)

You are not the GP, but you're making the same mistake. "Just for profit" != "profit NOW" Also, you are conflating the motivations of individuals within the company with the purpose management of a company in and of itself.

MBAs want to make more profit NOW. Not just this quarter, or this month, but NOW. And they don't care if it's only on paper, or only stealing sales figures from tomorrow. They will play a shell game to look better in the short run without producing anything.

By your own words, that is not managing for profit, it's managing "to look better". Managing in a way that deliberately compromises or destroys an institution's ability to continue generating profit is by definition not managing "just for profit".

The reality is that many engineers do things that are nearly as bad as the caricature of a MBA you describe, and can be extremely ineffective at managing even if the company flourishes while they are at the helm. The reason is that they compromise the systemic health of the organization by effectively turning it into a mechanism to extend the reach and scope of their own creative abilities. This typically represents the best way they know how to "make a better product", but leads to a company that is absolutely reliant on that specific person remaining at the helm in order to function*. That is why so many once-great companies crap out once their founders leave. Driven by the sole purpose of creating great products, the founders inadvertently constructed a fundamentally unstable organization without systemic protections against being taken over by idiots and shysters (in the best case this happens organically after they retire, but can also happen even before they actually leave--or can even force them to leave against their will). This also destroys profitability and threatens the company's survival in the long term (though on a longer-term horizon than the kind of deliberate value destruction described in your post).

* This is not too dissimilar to the situation where a programmer creates a polyglot codebase that elegantly solves complex problems, but that only he or she can ever get to compile or run without crashing and leaving behind only inscrutable log files and core dumps.

Re:Anyone else remember? (1)

manu0601 (2221348) | about a year ago | (#43376069)

Management for profit is a simple requirement for company survival--all it means is that you manage the enterprise such that the value that it is able to generate and capture as a result of its operations exceeds its share of the cost burden of its operations.

I realize english seems to use the same word "profit" for two things. Am I right here? This is a source of confusion.

  • Cash flow minus expenditures
  • Wealth given to shareholders

French has "bénéfices" vs "profits" to distinguish the two things. There is a big difference, which is investment. Management just for shareholder gains does not care about investment. In fact it does not care about company survival either: you can make money by selling all company assets and then go bankrupt. This is a quite popular approach theses days

Re:Anyone else remember? (1)

nebosuke (1012041) | about a year ago | (#43377497)

The second concept you listed--wealth given to shareholders--is return on investment, not profit. Whether that return on investment is in fact amounts to profits for those shareholders is a different matter.

Also, you have to be careful to distinguish profits generated for some entity other than the business (e.g., shareholders, employees, customers, etc.) vs. the business itself being profitable. Put another way, managing a business to be profitable is an entirely different matter from managing the business to generate profits for certain stakeholders. The latter can happen even in the extreme case of stakeholders destroying a viable business at a loss if that results in a net gain for them because of other factors. E.g., a large organization purchasing a smaller competitor for more than the latter is worth and then winding it down might be ultimately profitable if the resulting increased control over the market is sufficiently valuable. An individual employee (including the CEO) may also profit greatly by compromising the profitability of the company via what amounts to sabotage in return for bribes (which may take the form of anything from cash to guarantees of future employment elsewhere) or insider trading opportunities.

Re:Anyone else remember? (1)

nebosuke (1012041) | about a year ago | (#43377509)

Whether that return on investment is in fact amounts to profits for those shareholders is a different matter.

Wow. Apparently my brain simply does not function properly in the morning before I've had caffeine.

Re:Anyone else remember? (1)

manu0601 (2221348) | about a year ago | (#43377671)

Put another way, managing a business to be profitable is an entirely different matter from managing the business to generate profits for certain stakeholders.

Which is exactly what I meant, minus the "profit" translation issue. Businesses have to be profitable, but management just to generate profit for shareholders will destroy the company.

Re:Anyone else remember? (1)

nebosuke (1012041) | about a year ago | (#43380489)

Any management decisions that sacrifice the overall or long-term viability of the business for short-term benefit do not, in fact, generate profit (or minimize losses) for shareholders with the exception of the case where management has determined that the business itself is no longer economically viable and winding it down is the only way to avoid throwing more good money after bad.

Even if management is able to pump the stock price temporarily, if that is done at the expense of the fundamentals of the core business then it actually destroys shareholder value and profitability. It is critical to remember that just because share price goes up, that does not mean profits for shareholders because that potential profit is not turned into actual profit unless they sell their shares at the higher price. For these schemes to work, however, the number of current shareholders who are aware of what is happening must be significantly smaller than the number of new investors/shareholders-to-be who are fooled, because otherwise the net sell-off of shares will crash the stock price before it can be inflated. The only shareholders who profit from these pump and dump type schemes are the ones who actually realize what is going on (due to either greater insight or insider information) and wisely decide that it is no longer worth being a shareholder and thus sell their shares at the temporarily inflated price before the reality of what has happened becomes apparent to the wider market.

In other words, for the kind of temporary 'milk the cash cow' type strategies implied earlier in the thread to work, they need to fool the majority of current and potential shareholders such that they do not realize that the value of the company is in fact being destroyed. The fact that this does not "generate profit for shareholders" overall is almost tautalogical.

Re:Anyone else remember? (1)

kye4u (2686257) | about a year ago | (#43369475)

I am not sure there is a company where transition from engineer lead to financial lead produced any benefit to the products. And bad products push companies in death spiral.

What about the Microsoft transition from Bill Gates to Steve Ballmer or Apple and its transition to John Sculley? Oh wait, bad examples.

Re:Anyone else remember? (0)

Anonymous Coward | about a year ago | (#43371229)

It's called founder loss. Go take a look at HP's history and you'll see that where it took a turn downhill was when Dave Packard left. It's the same way everywhere; Honda hasn't produced anything worth a damn since Soichiro kicked the bucket, and anyone who held onto Apple stock after Jobs died is an idiot.

Re:Anyone else remember? (3, Interesting)

ocratato (2501012) | about a year ago | (#43365131)

Many, many years ago I worked as purchasing officer for a large research organisation. HP used to publish a magazine that showcased their latest equipment, usually describing the engineering that went into it in great detail. Within days of the magazine hitting the desks of our engineers we would get requests for these new gadgets, which HP was able to provide from local stock -- in Australia. That always impressed our engineers.

Re:Anyone else remember? (1)

Anonymous Coward | about a year ago | (#43365227)

I bought my first HP-33C from 1978. It was indestructible. Now I am afraid of all HP products especially their printer software. What happen ? Some shark bought the company for its reputation, started to produce low quality and ride on the name. The original founders were not happy about that.

Greed. Suck the most profit in the short term

Re:Anyone else remember? (0)

Anonymous Coward | about a year ago | (#43365491)

On the printer front 110mb driver downloads and what do the "drivers " do? Make the printer not work with non HP machines.

Re:Anyone else remember? (1)

chromaexcursion (2047080) | about a year ago | (#43365481)

It was NEVER really that way.
Read "The Silicon Boys"
or if you like sailing "Mine is Bigger"

Re:Anyone else remember? (1)

commodore73 (967172) | about a year ago | (#43368199)

> 50 years later and it still works fine That kind of product makes it harder to sell new product. Which is one reason why technology is so disposable today.

Re:Anyone else remember? (1)

inode_buddha (576844) | about a year ago | (#43368465)

Not necessarily. The old 'scope only goes up to a few megahertz. New electronics is in the GHz range. The old scope is therefore only good for AM radio and audio work anymore.

Re:Anyone else remember? (1)

commodore73 (967172) | about a year ago | (#43369017)

Agreed (scopes are definitely not my forte). I meant in general, good products actually work against a company. Take corningware - they made really good pots and pans that almost never broke, but I think they stopped selling them because eventually people didn't need new pots and pans.

A tribute to HP CEOs (0)

Anonymous Coward | about a year ago | (#43365155)

Here's a little tribute to the recent string of HP CEOs [youtube.com]

.

Lane was a poor choice for chairman (0)

Anonymous Coward | about a year ago | (#43365357)

Ray Lane had a role at Oracle in the '90s, and that was to be the soothing steady hand to reassure Oracle's customers that the place wasn't being run by a bunch of cowboys gone amok (even though it was). He has the personal touch of a managing partner. But a board of directors is about evaluating performance and competing plans for the future; hard skills are at least as important as soft skills. For example, Oracle has posted on their web site a page that shows that when Autonomy tried to interest Oracle in buying them, they were invited to give a presentation - and Mark Hurd then threw them out of the office midway through their presentation. You can't have chairmen and board members that are just interested in the superficial PR aspect of deals and changes in strategy.

HP is a mess (5, Insightful)

arbulus (1095967) | about a year ago | (#43365427)

They used to be such a respected company with bulletproof hardware. Anyone still have any of the old Laserjets around? Because, damn, those were fine printers. Their computers and servers were great. Their managed switches rivaled Cisco. Now, they're just a bunch of squabbling babies, wrapped up in office politics and too busy to focus on actually running a technology company.

Re:HP is a mess (2)

OhANameWhatName (2688401) | about a year ago | (#43365627)

too busy to focus on actually running a technology company

That's okay, HP isn't a technology company anymore. HP is a cut price consumer electronics manufacturer. With the related level of interest in HP's products, a squabbling bunch of babies does just as well as the most brilliant leadership money can buy.

Re:HP is a mess (1)

Anonymous Coward | about a year ago | (#43365837)

Absolute BS. I have found almost nothing to complain about in HP's very recent management (post Apotheker debacle and post overpaying for Autonomy, reportedly ignoring the CFOs strong objections at the time). Many investosr agree, which is why the stock has seen nearly vertical growth YTD.
The consumer market is only one (decreasingly important) segment of HP's business, and the company's recent investments and changes are clearly pushing the other segments for growth. And furthermore, those managed switches that rivaled Cisco are still there, and the new business-class printers are still pretty close to bullet proof too. IMHO they should have picked a different brand for the consumer junk rather than cheapening the whole brand, but it's far too late for that now.

Re:HP is a mess (0)

Anonymous Coward | about a year ago | (#43369587)

Politely, "That turns out not to be the case." Actually, I strongly question whether you know jack shit of what you speak.

The HP Way used to be that the consumer market was a natural spinoff for technologies developed for enterprise and commercial level applications, and a generation change of equipment meant you got fantastic new value of out new features. Anyone remember when a LaserJet was something that would be purchased by a mid-to-high level company? Small businesses could afford dot matrix by Epson. You'd arrived when you could afford a LaserJet and that would be your printer for the next decade or two. HP's personal calculator lines came out of an extension of their high-end desk computer/calcs used by banks and major Fortune companies.

They listened to their cusomters, and developed the Next Big Thing based upon what their customers explained would help them - and then went Above and Beyond in designing, manufacturing, and delivering it.

Equipment was over-engineered and built, flatly, NOT to fail ever. (Breakdowns occurred based not upon MTBF and product life cycles, but because some component didn't last the 'forever' that was hoped for.) That's a far cry from business level printers that must be re-bought every three to four years. I still have 10-12 year old HP Printers that I repair, because I know that I will never again get a product with that kind of longevity, and I damn sure can't get the same toner life/cost benefit of what they made years ago.

I mourned the loss of my HP48 calculator after 20 plus years of service, and kind of like my new HP50g (But only "kind of" because the new people running the ship apparently didn't think that people with decades of 48 touch-typing experience with, "Enter key is above the 7, plus key is to the lower right and minus key above that," might get a little annoyed when we consistently add numbers we intended to subtract because the layout is all wrong now for *basic math*, let alone advanced calculations. And yes, there is apparently a programming fix for it.... but why isn't it implemented in ROM?)

HP started dying the minute it was decided to underspend on R&D, focus on 'quick consumer' research, and exploit their King of the Hill status instead of building their mountain higher with innovation. Can it recover? Maybe. But it will keep dying until they recover The HP Way, or build a new way that makes them a leader again instead of a purveyor of yesteryear's stuff with a new label on it.

They ain't there yet.

RaymondLane Steps Down (1)

appshark (2862221) | about a year ago | (#43365983)

its a sad news Raymond Lane Steps down

HP's Elop (4, Interesting)

symbolset (646467) | about a year ago | (#43366719)

The person operating HP's business from day to day isn't named "Meg". HP's Chief Operating Officer is Microsoft's former Windows Business guy named Bill Veghte. Bill Veghte has operational control of HP and Meg Whitman is his PR meatpuppet: a figurehead with zero actual operational responsibility, just like she likes it.

You haven't heard about this because we're all familiar with how Microsoft is sending out its former executives like Elop and Veghte to wrest operational control of their partners' operations to try and main control of their Wintel PC ecosystem and regain some fraction of the control they had back when they were the 800lb gorilla on the field. Veghte is running HP on the down low. Any day now they'll get control of Dell too through an LBO. A fat lot of good that will do them: we're tired of this Machiavellian bullshit and the prevention of progress it sustains. HP and Dell together don't make even HTC, let alone a Samsung. Microsoft and all their still-loyal partners together don't make an Apple, let alone an Apple + IBM + Google + Samsung. Microsoft is not only not even no longer the king of the technology hill: they're playing king of the one-of-many foothills.

They have 2 options (1)

slashmydots (2189826) | about a year ago | (#43367539)

1. fire everyone on that board and in management and stop making products that suck

or

2. go bankrupt
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