Businesses need a creative side

Recently there has been a lot written about Steve Jobs’ departure as the chief executive of Apple. As of this month, Apple is the largest publicly traded company in the world by market capitalisation and the largest technology company in the world by revenue and profit.

The fascination people have about Jobs is his ability to bounce back and have great breakthrough. He started Apple in 1976 with Steve Wozniak and Mike Markkula, which came with the first commercially successful lines of personal computer in the 1980s. After a tug of war with Mike Sculley, Jobs resigned from Apple.

During the years of his absence the creative output and the share price of Apple went down. In this period Jobs formed Pixar, an animation company, that he eventually sold to Disney. He returned to Apple in 1996 and the rest is history.

Jobs has become iconic as the best second act story in business history.

So my analysis will focus on the ever constant tussle between the creative view versus the accountant’s view of running business.

First, the creative view of running a business beats the accountant’s view of running a business. Without the creative side there is no business to even speak of.

The creative side requires imagination coupled with action to bring about the thing imagined into actual existence.

Accounting then comes into play to measure the impact of the actions taken, which is an after-the-fact phenomenon because the accounting process is focused on reporting factual historical information.

This is why it is easier to look at things based on hindsight about what actions should have been taken to yield the best results. Accounting reporting does not take the risk of predicting results arising from possible actions, which is the domain of the creative part of business.

Second, accounting reporting is a useful accountability tool to use to measure the impact of the creatives in the business in terms of rands and cents. It brings about controls that help to maximise value.

However, the value in a business is mostly attributable to the creative energy that is flowing within the key parts of the business. So this accountability function played by accountants makes them the hated part of the business because they ask the tough questions that affect the final output of the business and the efficient use of the company resources.

This also causes accountants to be risk averse within the organisation because they focus on the bottom line impact of every decision made within the company.

So why is this relevant?

In most companies where you have the creative types running it, great value is created if it is balanced by the proper accounting teams.

If you have one extreme it would be the tech bubble of the 2000s, which showed the impact of creatives being given unfettered freedom in running the business without the proper accounting checks and balances. This led companies to be overvalued even when they had no sustainable tangible revenue potential to speak of, but only showed the creative potential.

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Infosys announces new Executive Council to frame business strategies

Software major Infosys Technologies on Saturday announced composition of new Executive Council (EC), a high level body that frames its business strategies.

The EC will include the executive board, current EC members, heads of key business units and strategic business enabler units.

"It gives me great pleasure to announce the new executive council of Infosys. The new EC is a group of highly competent professionals who would closely work with the Board in formulating business strategy and framing policies for the organisation," Infosys CEO & MD S Gopalakrishnan said.

"This is one of the most significant announcements that will shape the Infosys of tomorrow," he added.

Infosys rejig: Will it stick to tradition?

The members of the EC are: S Gopalakrishnan, S D Shibulal COO, Srinath Batni, Director and Head, Delivery Excellence, V Balakrishnan, CFO, Ashok Vemuri, Senior VP and Head Banking and Capital Markets and Strategic Global Sourcing, the release said.

Other members are B G Srinivas Senior V-P and Head Manufacturing, Product Engineering, Product Lifecycle and Engineering Solutions, Chandrashekar Kakal, Senior VP Enterprise Solutions, U B Pravin Rao, Senior VP, Retail, CPG & Logistics, Prasad Thrikutam Head, Energy, Utilities, Communications & Services, Infosys Limited Global Head, Systems Integration.

Steve Pratt CEO and MD, Infosys Consulting, Ramadas Kamath U, Senior VP, Administration, Commercial Facilities, Infrastructure, Nandita Gurjar, Senior VP and Group Head, Human Resources and Basab Pradhan, Global Head of Sales, are the other members of the EC, the release added.

Earlier this week, Infosys posted a 15.72 per cent jump in its first quarter consolidated net profit year-on-year at Rs 1,722 crore as against Rs 1,488 crore in the year-ago period, meeting street expectations.

The company's revenues rose to Rs 7,485 crore in the first quarter from Rs 6,198 crore in the year-ago period, up 20.76 per cent.

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Mobile banking to help 2 billion people by 2020

FRANKFURT (Reuters) - Mobile financial services are expected to improve the lives of around 2 billion people in developing countries within a decade and boost economies, a Boston Consulting Group study found.

"Overall, mobile financial services can reduce financial exclusion by 5 percent to 20 percent through 2020 and increase gross domestic product (GDP) by up to 5 percent, with Pakistan, for instance, potentially seeing a 3 percent uplift," the study said.

It added that improved access to finance fostered entrepreneurship, new business creation and new jobs.

The report, released by Norwegian telecom group Telenor on Tuesday, focused on five countries -- Pakistan, Bangladesh, India, Malaysia and Serbia -- which represented a broad development range, it said.

Some 72 percent of the population in developing countries are without access to banks or credit cards according to the study.

They manage to work around this by borrowing from friends and family, obtaining short-term credit from employers, forming savings clubs or seeking out moneylenders but these options were often risky, costly and with indeterminate results.

Telecom firms such as Telenor, Vodafone , Orange and MTN have begun investing in mobile payment systems in Asia and Africa that allow consumers to make basic payments for utilities for example but also participate in savings, credit and insurance programmes via mobile phones.

Mobile financial services can also help overcome economic shocks such as natural disasters or unexpected medical emergencies, the study said.

In Kenya, Safaricom's M-Pesa's UAP Insurance insures poor farmers through mobile phones against weather-induced crop failures for example.

Norway's Telenor said it was still early days but that the potential for growth was expected to be huge.

Telenor's EasyPaisa programme in Pakistan started with 2,200 retail outlets in October 2009 and now has 12,600 retailers spread over 650 cities across the country.

It has some 10 million estimated users and the total value of money transfers has reached 17.4 billion Pakistan rupees ($167.2 million).

"We believe that mobile financial services will be one of the key drivers for financial inclusion going forward and thus has the potential to be the most powerful tool for economic and social development in emerging economies," Telenor Chief executive Jon Fredrik Baksaas said in a statement on Tuesday.

Nokia Joins Forces With Microsoft to Challenge Apple, Google; Shares Slump

Nokia Oyj, the world’s largest maker of mobile phones, said it’s forming a software corporation with Microsoft Corp, betting that together the two companies can challenge Google Inc. and Apple Inc.

Nokia fell as much as 12 percent, the biggest fall in a almost 10 months, after its plan to make Microsoft’s Windows its primary software was seen as a sign of the extent of its troubles taking on Apple’s iOS and Google’s Android platforms.

“It’s a clear admission that Nokia’s own platform strategy has faltered,” told Ben Wood, a London-based analyst with CCS Insight. “Microsoft is the big winner in this deal, but there are no silver bullets for either company given strength of iPhone and Android.”

Coke Sales Rise Globally

Coca-Cola Co. posted solid fourth-quarter worldwide sales growth and continued to take share from rival PepsiCo Inc. in the key North American market.

Coke's growth was fastest in emerging markets like India and Brazil, but the company is seeing stabilization in its biggest markets. In North America, sales volume in juices, sodas and all other beverages rose 3%, excluding the impact of acquisitions and foreign-currency translations. That was the third straight quarter the figure was up. Parts of Europe saw budding signs of recovery.

Significantly, Coke also saw its North American soda sales volume tick up for the third straight quarter, in defiance of a years-long slide across the industry as customers switched to water and other drinks for health and economic reasons.

Dollar falls against euro as China raises rates

The U.S. dollar fell to the euro in late trading Tuesday after China announced that it would increase rates. Investors have also become less worried about the unrest in Egypt, moving away from the dollar and looking to invest in riskier currencies.

China's central bank said Tuesday that it would increase deposit and lending interest rates by a quarter percentage point, the second time China has raised rates in over a month.

"It was expected, but the time was unknown," said Camilla Sutton, chief currency strategist at Scotia Capital. "Investors are anticipating more interest rate hikes out of China."

Toyota Motor Q3 profit slumps, outlook lifted

October-December operating profit was 99.07 billion yen ($1.20 billion), down from 189.1 billion yen in the similar period a year earlier. Net profit fell 38.9 percent to 93.63 billion yen.

For the year to March 31 it lifted its working profit forecast to 550 billion yen ($6.68 billion) from 380 billion yen, after profits for the first nine months exceeded that figure.

It increased its global sales forecast to 7.48 million vehicles from 7.41 million, with domestic sales seen at 2.02 million vehicles compared with an earlier prediction of 1.99 million. Its U.S. forecast was unchanged at 2.09 million units

GLOBAL MARKETS: European Stocks Rise; Bullish Tone Exists

European stock markets push top Tuesday, with shares in London leading the way, as market participants are seemingly hopeful about the global economic outlook in the year ahead.

Equity markets are expected to trade powerfully through 2011 on a combination of multiple expansion and earnings growth, told Royal Bank of Scotland. It added that increasing optimism around the U.S. economy may contribute to pro-equity asset allocation flows, while in Europe, earnings-per-share growth could be just over 20%, as the global economy helps the top line, while domestic labor market slack ensures favorable unit labor cost trends persist.

"Our Stoxx Europe 600 year-end target of 320 implies circa 15% upside from present levels, and would see the market multiple rise to 12x 2011 earnings [currently around 11x]," added RBS.

Sony to Spend $1.2 Billion for Image Sensor Capacity

Sony Corp. will invest 100 billion yen ($1.2 billion) over the next fiscal year to twice its production capacity for image sensors, as the company aims to expand output of the devices used in smartphones.

The maker of Cyber-shot cameras will buy back from Toshiba Corp. a factory making chips used in PlayStation 3 game consoles and convert the plant into an image-sensor production facility, Tokyo-based Sony said today in a statement. The company also plans to include equipment to an existing plant in Nagasaki, western Japan, to make high-quality image sensors, it said.

The investment follows a plan by Sony, disclosed in September, to spend 40 billion yen to boost output of so-called CMOS chips at a factory in Kumamoto prefecture. Japan’s largest exporter of consumer electronics aims to win a 30 percent share of shipments in the market for image sensors used in cell phones, compared with about 10 percent for the year ending March 2011, Yoko Yasukochi, a Sony spokeswoman, said by phone today.

Oracle wants $211 million in interest from SAP

Turning up the heat in a bitter legal dispute, software maker Oracle is asking a federal judge to order German rival SAP to give $211 million in interest on a record $1.3 billion jury award for software pirating.

Oracle filed the request Friday, saying the interest is necessary to "fully compensate" Oracle for the worth of software licenses that SAP should have purchased in 2005 and 2006.

SAP has already made a separate payment to Oracle of $120 million for its legal expenses, after acknowledging that an SAP subsidiary copied Oracle software without authorization. A federal jury decided previous month that SAP should pay what would have been the market value for licenses to use the software at the time, which the jury pegged at $1.3 billion.

Heinz profit beats estimates; sees more cash

Ketchup maker H.J. Heinz Co (HNZ.N) posted higher-than-expected quarterly earnings, helped by price increases and growth in emerging markets.

The company, which also makes Ore-Ida frozen potatoes and Smart Ones frozen entrees, affirmed its earnings outlook for the complete fiscal year but raised the target for how much free cash it expects to generate.

Profit in the second quarter, ended Oct. 27, was $251.4 million, or 78 cents a share, compared with $231.4 million, or 73 cents a share, a year previous.

Analysts on average were expecting 76 cents per share, according to Thomson Reuters I/B/E/S.

Sales fell 1.2 percent to $2.61 billion, hurt by the impact of foreign exchange rates and falling short of analysts' expectations for $2.67 billion.

Sales volume increased 0.3 percent, driven by 2.6 percent growth in emerging markets. Cost increases lifted sales by 0.6 percent.

Heinz said it is still on track to deliver fiscal 2011 growth of 3 percent to 4 percent in sales and 7 percent to 10 percent in earnings per share. It raised its free cash flow target by 15 percent to $1.15 billion.

Top Democrat seeks small business tax form repeal

Senator Max Baucus, chairman of that chamber's tax-writing committee, said he would introduce legislation to repeal that part of the law, which requires filing so-called 1099 forms, after small business groups complained it would become a paperwork nightmare.

Republicans, who won control of the U.S. House of Representatives election and gained seats in the Senate in the recent elections, have vowed to try to repeal the entire healthcare law. They have also sought repeal of the 1099 provision separately.

Baucus noted that the change was originally proposed under former Republican President George W. Bush.

Baucus said he was convinced by business groups' complaints that it was an administrative burden.

"I have heard small businesses loud and clear and I am responding to their concerns," Baucus said in a statement.

Obama last week said that he would fight any attempt to repeal the legislation, but would be willing to consider some Republican ideas. He suggested the two sides work together to change the new business transaction reporting requirement.

Intel plans 1,000 high-tech jobs in 2 states

Intel announced Tuesday that is investing up to $8 billion in microchip manufacturing plants that could create up to 1,000 permanent high-tech jobs in Arizona and Oregon.

Intel said it will spend between $6 billion and $8 billion to fund a new development fabrication plants in Oregon and to upgrade four existing plants in Oregon and Arizona. The plants will manufacture "next-generation" 22-nanometer microprocessors, or chips, the company said.

The company said this will support the creation of 800 to 1,000 permanent high-tech jobs as well as 6,000 to 8,000 construction jobs.

Intel also said the investment will allow it "to maintain its current manufacturing employment at these U.S. sites."

Intel spokeswoman Lisa Malloy said the new plant will be built in Hillsboro, Ore., near Portland, where the company already has a significant presence. Of the four plants slated for upgrade, two are in Hillsboro and two are in the greater Phoenix area.

Intel, based in Santa Clara, Calif., said it generates three quarters of its revenue from overseas markets, but employs three quarters of its chip-making employees in the United States.

"It does cost a bit more to build one of these factories from scratch in the U.S.," Intel chief executive Paul Otellini told CNN's Ali Velshi in a live interview.

But he said labor costs are not the main problem -- grants from foreign countries are the biggest incentives for U.S. companies to build factories overseas. He said the U.S. government should offer more incentives to build plants in America.

Google nears $600

Shares of Google opened up 10% Friday morning, and came within striking distance of $600 for the first time in more than nine months, after the company posted solid quarterly earnings that impressed investors.

Google's (GOOG, Fortune 500) stock rose as much as $58.42 to $599.35 a share in early morning trading, before sliding back a bit. It was the stock's highest level since January.

Late Thursday, Google reported a third-quarter profit that rose 32% on the back of stronger search ad fees from advertisers. But the company's results were also buoyed by its non-core businesses, like YouTube, display advertising and mobile.

Google defied skeptical investors and analysts who feared that the search giant would never find a a significant new revenue stream besides search advertisements. In the past, the company has been tight-lipped about the financial details of its non-search businesses, leading some analysts to speculate that those product lines were insignificant to the company's overall revenue.

For instance, Google has made tremendous headway in mobile. Its Android operating system will command 17.7% of the global mobile device market by year's end, according to a Gartner forecast, making it the second best-selling smartphone operating system, behind Nokia's (NOK) Symbian OS and ahead of Apple's (AAPL, Fortune 500) iOS. That's stunning, considering it entered the market just two years ago.

Google said its mobile advertising business was doing sales of $1 billion on an annualized basis. Display advertising, which includes images rather than textual ads, is on pace to be a $2.5 billion business annually. The company said its display business is likely the third largest in the world, behind AOL (AOL) and Yahoo (YHOO, Fortune 500).

Investors had slammed Google's stock this year, sending it down by as much as 30%. Shares started to rebound in September, but were still down 13% before Friday's market open. But Google's impressive quarterly numbers sent shares soaring, and the stock is now down just 4% for the year.

President Obama hails New York teens' life-saving business ideas

President Obama honored two New York teens on Tuesday who are using their business skills to save lives.

Steven Gordon, 18, of Brooklyn, and Nia Froome, 17, of Valley Stream, L.I., are among the winners of the 2010 Oppenheimer Funds/Network for Teaching Entrepreneurship National Youth Entrepreneurship Challenge, which encourages kids from poorer communities to pursue careers in business.

Gordon founded TattooID when he learned that 1.3 million children are reported missing each year.

After taking a two-week business seminar at Columbia University, Gordon came up with the idea for the "TattooID," a temporary tattoo stamped on the hand or arm of children with their initials and contact information.

"I got the idea for the tattoos one day thinking about my little brother and wondering what would we do if we ever lost him," Gordon said.

"It's an unbelievable honor to meet the President - not something I ever expected. I mean, I'm from Brooklyn, ya know," chirped the Hunter College freshman, who has made about $200 so far from the idea.

Froome, who attends Poly Prep Country Day School in Brooklyn, learned how to cook vegan dishes about 10 years ago when her mother was diagnosed with breast cancer.

She was told a vegan diet could slow the growth of cancer cells. Froome took a decade of her experience in the kitchen and turned it into Mamma Nia's Vegan Bakery.

Wal-Mart to start selling Apple's iPad

Wal-Mart said the iPad will be available in hundreds of its stores in the United States to start, expanding to more than 2,300 outlets by mid-November.

Wal-Mart rivals Best Buy and Target are already selling the iPad, which Apple launched in April.

Demand for the 10-inch touchscreen tablet has so far been robust, and Apple initially had a difficult time producing enough.

The company sold more than 3 million iPads in the June quarter, and Wall Street expects the company to surpass that mark with ease in the September quarter.

Apple is set to report quarterly results next Monday.

Wal-Mart will sell the iPad for the same price as other retailers, starting at $499 for the more inexpensive model. The world's largest retailer already sells Apple's iPod and iPhone.

Shares of Cupertino, California-based Apple were up $1.75 at $297.11 in midday trading on the Nasdaq.

Renault's Improving Grip on Road

Renault is one of the cheapest but riskiest bets on the global auto sector. The stock has gotten a lot less risky now that the French auto maker has drastically reduced its debt by selling part of its stake in truck-maker Volvo AB. No wonder investors are excited. Renault's stock was up 7% Thursday. The cost of insuring Renault's debt against default also fell sharply. But investors still need to keep their enthusiasm in check.

Renault has done well to raise €3 billion ($4.18 billion) by selling all its 303 million B shares in Volvo for 93 Swedish kronor ($13.88) each, a slight discount to Wednesday's closing price but 60% above the stock's 2010 low. Better-than-expected U.S. September truck orders ensured strong institutional investor demand for Volvo stock. The French auto maker is retaining its A shares in Volvo, which gives it a 6.8% equity stake and 17.5% of the votes.

The move dramatically reduces leverage in Renault's automotive business. It had net debt of €4.7 billion as of June 30, equivalent to 1.3 times forecast 2010 earnings before interest, taxes, depreciation and amortization. Renault's extra financial security isn't to be sniffed at considering it was bailed out by the French government last year.

But Renault still faces considerable challenges. It is heavily reliant on selling low-margin small cars in Europe, a market likely to contract as subsidies end next year. The yen's strength against the dollar is a headache for Nissan Motor Co., which is responsible for most of Renault's earnings. Investments in Russia, a small-car partnership with Daimler, and a €4 billion electric-car program are years from contributing to earnings.

Investors currently attribute negative value to Renault itself. Using market valuations for its 44% stake in Nissan and other strategic investments, Renault is worth minus €14 a share, based on Tuesday's closing stock price, according to Credit Suisse. That suggests some potential upside for the shares. But while a deleveraged Renault is less likely to lose its grip of the road, the way ahead still looks bumpy.

Verdantix Forecasts US Sustainable Business Spending Will Double To $60 Billion By 2014

The US sustainable business market will double to $60bn in 2014 from $28bn in 2010, according to a new report from independent analyst firm Verdantix. Based on an analysis of 1,833 firms with US revenues of at least $1bn, sustainability spend will increase by 11% in 2010 compared to 2009. This positive trend will continue with a year-on-year increase of 16% in 2011 accelerating to growth of 24% in 2012. Over the 2009 to 2014 period the compound annual growth rate will be 19% across all 20 industries covered by the market forecast.

“Executive awareness of the business benefits of sustainability is on the rise” commented Verdantix Director, David Metcalfe. “The elevation of sustainable business decisions to the C-Suite drives increased expenditure across all sustainability issues. But the US sustainable business market is still 2 years away from rapid growth due to the sluggish global economy, delayed federal regulations and a lack of mature programs in firms with revenues of less than $10bn.”

Nvidia enters the graphics card business

Enthusiast site HardOCP reported last night about its purchase of two Nvidia-branded graphics cards from a local Best Buy. This is news.

Previously, Nvidia has been a maker only of graphics chips, leaving its partners like EVGA, ASUS, PNY, and others to handle the business of building the chips into graphics cards, and packaging and selling them at retail. It seems Nvidia has decided to change that relationship.

Nvidia's technical marketing director, Nick Stam, confirmed for us this morning that what HardOCP found is indeed part of a new strategy. In an exclusive partnership with Best Buy, Nvidia is now selling boxed graphics cards "built and supported by Nvidia" at retail. The card selection is limited for now to the midrange GeForce GTX 460 and the GeForce GTS 450, although those cards represent the most profitable $125 to $250 sweet spot of the retail graphics card business.

Nestle to invest $500M in medicinal foods business

Nestle will plow some $500 million into expanding its medical nutrition business over the next decade, in a bid to capture a slice of the growing market for foods to treat chronic conditions such as diabetes and obesity, the Swiss consumer company said Monday.

Nestle SA said it wants to "pioneer a new industry between food and pharma" by creating a medical nutrition institute in Switzerland and a stand-alone subsidiary called Nestle Health Science SA.

The Vevey-based company is already one of the world's biggest producers of processed foods including Nesquik cereal, Haagen-Dazs ice cream and Nespresso coffee, with sales of some $100 billion last year.

The decision to expand its medical nutrition segment is a direct challenge to North Chicago, Illinois-based Abbott Laboratories, which has steadily increased its presence outside the traditional pharmaceutical market.

Peter Brabeck-Letmathe, Nestle's chairman and former chief executive, said health care systems worlwide are struggling to cope with the growing number of people suffering from diabetes, obesity, cardiovascular disease and Alzheimer's.

"Finding efficient and cost-effective ways to prevent and treat acute and chronic diseases" will be the goal of Nestle's research combining food and medical science, he said.