In discussing the digital tools that he uses daily, Microsoft chairman Bill Gates in this CNN Money article provides an interesting glimpse into how he organizes his workday, particularly with regard to two constant problems — email and paper:

I get about 100 e-mails a day. We apply filtering to keep it to that levelóe-mail comes straight to me from anyone I’ve ever corresponded with, . . .and anyone I know. And I always see a write-up from my assistant of any other e-mail, from companies that aren’t on my permission list or individuals I don’t know. That way I know what people are praising us for, what they are complaining about, and what they are asking.
We’re at the point now where the challenge isn’t how to communicate effectively with e-mail, it’s ensuring that you spend your time on the e-mail that matters most. I use tools like “in-box rules” and search folders to mark and group messages based on their content and importance.

As you might expect, paper is not a big part of Gates’ experience:

Paper is no longer a big part of my day. I get 90% of my news online, and when I go to a meeting and want to jot things down, I bring my Tablet PC. It’s fully synchronized with my office machine so I have all the files I need. It also has a note-taking piece of software called OneNote, so all my notes are in digital form.

And his one low-tech piece of office equipment:

The one low-tech piece of equipment still in my office is my whiteboard. I always have nice color pens, and it’s great for brainstorming when I’m with other people, and even sometimes by myself.

But there is one overused low-tech aspect of management that even Gates cannot avoid:

Days are often filled with meetings. It’s a nice luxury to get some time to go write up my thoughts or follow up on meetings during the day. But sometimes that doesn’t happen.

With all the recent talk lately about hedge funds shorting stocks (here and here, it’s important to remember that the information marketplace is a big place. Something that may seem like a keen insight to one investor is dismissed as baseless negative information by another.
With that backdrop, remember Long Term Capital Management? Back during the latter stages of the stock market bubble of the late 1990’s, the Federal Reserve organized a rescue of LTCM, which was a large and prominent hedge fund that was on the brink of failure. The Fed intervened because of Clinton Administration concern at the time about possible dire consequences for world financial markets if the hedge fund were allowed to fail. As it turned out, the Fed’s concerns about the effects of LTCM’s failure on world financial markets were exaggerated and the Fed’s intervention simply helped the LTCM shareholders and managers get a better financial deal for themselves than they deserved or would otherwise have obtained (and none got indicted). The intervention also was misguided from a public policy standpoint, but that’s a subject for another post.
In this interesting post, Ed Sim passes along an observation from a friend about something that reminds him of LTCM:

I was having lunch with a friend recently who was telling me about some of his dealings with Google over the last year. As an ex-Wall Street guy, it struck him that some of the meetings he had with Google were like the ones he had at Long Term Capital years ago.

Read the entire post. But short Google at your own risk. ;^)

Fortune magazine has just published its annual Fortune 500 list of America’s largest public companies, and ExxonMobil again leads the pack. ConocoPhillips weighs in as Houston’s largest public company at number six on the Fortune 500.
Here is the top ten:
1. ExxonMobil
2. Wal-Mart Stores
3. General Motors
4. Chevron
5. Ford Motor
6. ConocoPhillips
7. General Electric
8. Citigroup
9. AIG
10. IBM
Houston, with 23 companies on the list, is second only to New York City (44) as a home for Fortune 500 companies. Dallas has 11 companies on the list and San Antonio has five.
By the way, is it just me or is it a sign of the times that two of the Fortune 500’s top ten — GM and AIG — have experienced Enronesque experiences over the past year?
By the way II, don’t miss Larry Ribstein’s terrific post on GM today as he explains how GM’s traditional business form perpetuated a flawed business model and what that could mean for the structuring of firms in the future.

The Enronesque experience of General Motors has been a common topic on this blog, but you know it’s gotten bad for the automaker when even Tiger Woods’s endorsement appeal cannot bolster one of the company’s brands. This John O’Dell/LA Times article reports about the slide into oblivion of GM’s Buick brand:

Buick was the seed from which General Motors Corp. sprouted. And for generations, the luxury car line was one of GM’s most bountiful divisions.
The Buick brand filled a crucial niche for the auto giant, attracting well-heeled consumers who wanted more than an Oldsmobile but weren’t comfortable with the flash of a Cadillac.
Now as GM faces the threat of bankruptcy, Buick has emerged as an emblem of the auto giant’s broader woes. GM sold nearly a million Buicks in the U.S. in 1984. By last year, sales had sputtered to 282,288, a 70% decline over two decades, the biggest of any major auto brand.
Buick has broken down in U.S. showrooms for the same reasons that Americans deserted GM brands such as Chevrolet, Pontiac and Olds in favor of Toyota, Honda and Nissan. [. . .] Even using golf superstar Tiger Woods as pitchman hasn’t helped Buick. [. . .]

Continue reading →

This NY Times article profiles new ExxonMobil CEO Rex W. Tillerson, who succeeded Lee Raymond three months ago.
Although Exxon’s core strategy will not change under Tillerson’s leadership, the article notes that Tillerson’s style is definitely different from that of the notoriously serious Raymond. At a recent news conference, Tillerson was asked what he thought would happen to oil prices this year:

“If I knew,” Tillerson quipped. “I’d be living on a Caribbean island with my flip-flops and a laptop, working just two hours a day.”

Geez, talk about a bad day at the office.
Embattled General Motors (prior posts here) conceded in its delayed regulatory filings filed yesterday that it had found “material weaknesses” or “significant deficiencies” in the company’s accounting controls, and that the company’s financial statements for 2002-2004 and for the first three quarters of 2005 “should no longer be relied upon” because of accounting errors. The company filed corrected statements for those periods with the SEC yesterday.
In addition, the company announced that it may have a bit of trouble peddling its valuable financing unit because of the complexity involved in arranging such a deal and, oh by the way, several years worth of results for that unit need to be restated, too. Then, this NY Times article questions whether GM current management has what it takes to pull the company out of its tailspin.
But to top it all off, GM announced that it had received a subpoena from a federal grand jury investigating its handling of payments or “credits” from suppliers, and that it had received a subpoena from the Securities and Exchange Commission in connection with a previously disclosed investigation of GM’s transactions in precious-metal raw materials. That makes six subpoenas from the SEC and two subpoenas from federal grand over the past six months.

Continue reading →

This Floyd Norris/NY Times article reports that General Motors’ descent toward what is increasingly looking like an inevitable reorganization is looking absolutely Enronesque:

There was a time when General Motors was seen as the paragon of financial quality. Its bonds were rated triple A, and it was known for the most conservative accounting. Let other companies use liberal accounting rules to make results look better; G.M. did not need such things.

The announcement late Thursday that General Motors would revise profit figures for every year of this decade, and would have to restate the 2005 earnings it had already reported, shows how far the icon has fallen. Less than a year after it lost its investment-grade bond rating, its bonds are viewed as middling even among junk bonds.

“You have to question what controls are in place,” said Charles W. Mulford, an accounting professor at Georgia Tech. “When companies like G.M. are profitable, there is not a need to engage in aggressive accounting. What we are seeing now is a pattern of very aggressive accounting that took them well beyond the limits of generally accepted accounting principles.”

The restatements indicate that G.M. used some highly questionable accounting techniques in 2000, when it seemed to be flying high, and a year later when profits fell sharply.

Funny how those “questionable accounting techniques” occurred both before and after Sarbanes-Oxley, isn’t it?

Earlier posts here, here, and here — among others — question the conventional wisdom that the Bush Administration is particularly pro-business in its orientation.
Consistent with that theme, Larry Ribstein notes that the Bush Administration’s stance on Sarbanes-Oxley has reflected an appalling lack of leadership in regard to business issues:

The Democrats’ position on [modification of] SOX doesn’t go far enough, but at least it goes somewhere. It’s not that I’m ready to conclude that the Democrats can be trusted as the party of business. But somebody has to defend business’s interest, and on the critical issues concerning SOX, it hasn’t so far been the Republicans.

Professor Ribstein follows up that post with this one that summarizes his presentation to the American Enterprise Institute on Sarbanes-Oxley.
Meanwhile, Professor Ribstein’s skepticism of the Bush Administration’s true orientation toward business is mirrored in Bruce Bartlett’s new book on Bush Administration fiscal policy, Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy (Doubleday 2006), which Publisher’s Weekly describes as follows:

Bartlett’s attack boils down to one key premise: Bush is a shallow opportunist who has cast aside the principles of the “Reagan Revolution” for short-term political gains that may wind up hurting the American economy as badly as, if not worse than, Nixon’s did. As part of a simple, point-by-point critique of Bush’s “finger-in-the-wind” approach to economic leadership, Bartlett singles out the Medicare prescription drug bill of 2003ó “the worst piece of legislation ever enacted”óas a particularly egregious example of the increases in government spending that will, he says, make tax hikes inevitable. Bush has further weakened the Republican Party by failing to establish a successor who can run in the next election, Bartlett says. If the Reaganites want to restore the party’s tradition of fiscal conservatism and small government, he worries, let alone keep the Democrats out of the White House, they will have their work cut out for them.

Interestingly, the Bush Administration does not appear particularly enthusiastic to challenge Bartlett on this thesis.

So, two Hewlett-Packard shareholders filed the seemingly inevitable lawsuit yesterday against the company contending that a $21.4 million severance package provided to former CEO Carly Fiorina violated the company’s policy on executive compensation. Previous posts on Fiorina’s reign at HP are here.
Although the corporate case of decade would appear to be fairly persuasive authority for dismissal of this lawsuit, the cause of action might survive simply because of a dispute over the technical issue of valuation of Fiorina’s severance package.
Nevertheless, as I recall, HP stock was trading at around $19 per share at the time of Fiorina’s forced resignation in early 2005. The stock closed at $32.96 yesterday. Rather than criticizing the severance package for Fiorina, shouldn’t HP shareholders be celebrating the wisdom of the HP board in cutting Fiorina loose even with a generous severance?

A day after the news of the latest big merger, the WSJ’s Melanie Trottman reports here ($) that the merger of U.S. Airways and America West Airlines is having, ahem, might we say, “cultural problems”:

As executives try to figure out how to make the newly merged US Airways Group Inc. profitable, employees from both sides of the merger are squabbling over everything — from choosing uniforms to more weighty issues such as how to determine seniority for pilots and how to manage discounted free-flight privileges for workers.
Last month, violence erupted at a Philadelphia airport hotel between members and officials of unions vying to represent the fleet-service workers of the combined airline. According to the police, 25 members of the premerged US Airways’ fleet-service workers union showed up at an open meeting conducted by five organizers for the union that represents fleet-service workers at America West, telling them to leave. When they didn’t, the entrants started to fight and throw chairs at the five organizers, according to police.

Read the entire article. Inasmuch as US Airways has been in chapter 11 twice over the past several years and America West has also been through a chapter 11 reorganization in its past, the next chapter 11 reorganization of this merged airline would technically be a chapter 44 (4 X 11) case, which I believe would be a record for even the notoriously reorganization-prone airline industry.