Friday, August 23, 2013

Shares surge as Ballmer quits Microsoft; India's urge to create smaller states; Why Nokia may leave India

1 Shares surge as Ballmer quits Microsoft (Rory Carroll in The Guardian) Microsoft has stepped into a new and uncertain era with the announcement that CEO Steve Ballmer will retire within 12 months, triggering a search for a successor to take over the software behemoth. The announcement surprised analysts and investors and sent shares surging, reflecting belief that the company will benefit from new leadership as it tries to innovate and chase the market for smartphones and tablets. "There is never a perfect time for this type of transition, but now is the right time," Ballmer said.

Ballmer, 57, who succeeded Bill Gates as CEO in 2000, will stay on until a successor is found. Gates, who is now chairman of the board, will be part of a small committee tasked with finding the successor. It will be chaired by John Thompson, the board's lead independent director, and consider internal and external candidates.
Ballmer's departure will likely draw a line under Microsoft's origins and traditional tenure. He first met Gates in 1973 when they shared a dormitory hall at Harvard university. He joined the company in 1980 – the company's 30th employee – after it landed a contract to supply an operating system to IBM and swiftly rose up the ranks. Under Ballmer the company developed successful products like WindowsXP and the Xbox 360. It grew to be worth $78bn and employ more than 100,000 people. It has more than a billion users and remains immensely profitable.
Over the past decade, however, its share price stagnated in contrast to the meteor-like performance of Apple, Google and Amazon. Once the world's most valuable company, Microsoft hemorrhaged more than half of its market value. Critics accused Ballmer of failing to anticipate the explosive growth in tablets and smartphones and the decline of personal computers.

2 India’s urge to create more states (Neeta Lal in Khaleej Times) Creating smaller Indian states could be an invitation to anarchy. If the US can prosper with 50 states, why can’t India with just 29?” a veteran Congressman riposted as we jaw-jawed over the pros and cons of India being disaggregated into smaller states. The UPA government’s recent decision to create the country’s 29th state — Telangana — out of the southern state of Andhra Pradesh, has unleashed a political storm. Just days after the announcement, regional ethnic and religious groups have upped their ante to ask for separation from their parent states.

India last redrew its internal boundaries in 2000, with the creation of three new states in the northern half of the country. But the moot point is: do smaller states work better in a pluralistic and heterogeneous country like India? If yes, then how should the states be carved up and administered? After all, India has five states with individual populations larger than Europe’s biggest nation, Germany. Even the country’s 16th largest state – Haryana -- has more people than the whole of Australia!

Besides, many of India’s 35 states and union territories are at demographic extremes. They are either monsters like UP and Maharashtra (their combined population of 320m is greater than that of the US), or minnows with barely one million people. Being a small state alone doesn’t guarantee good governance, economic performance and welfare of individuals. A basic research on various development parameters of the three states that were created in 2000 proves that small is not always splendid.

Nobody objects if the states are bifurcated on a scientific basis. But dividing them purely to accrue electoral gains is an invitation to chaos. The lust for political power seems to be eclipsing constitutional propriety. India’s unity may not be under immediate threat, but more and more states being disaggregated can rupture the national fabric. Eight Indian states are already under militarily governance. Long story short, division of India is the antithesis to any sensible reconstruction of constitutional federalism.

3 Why Nokia may leave India (R Jai Krishna & Sven Grundberg in The Wall Street Journal) According to a report in the Indian Express newspaper, the Finnish handset maker has said that India has become “the least favorable market” and it would rather exit and export its handsets from China. Nokia couldn’t confirm the contents of a letter apparently submitted to the government and cited by the report, but Nokia spokesman Brett Young said the company has been in discussions with the Indian government and the state government over ways to bring “greater clarity to the business environment in India.”

The report comes after the company ran into tax issues in India. In late May, Nokia lost an appeal against an order for 20.8 billion ($323.4 million) in retrospective taxes on software the Indian unit supplied to its parent firm. The company contends it has not received a tax refund it was promised as part of a pact with the southern Indian state of Tamil Nadu. The Helsinki-based company cited “political risk” of operating in the country that could impact its future investment decisions, the newspaper reported, citing a letter written by the company to India’s trade ministry in June.

Nokia has a facility to make handsets near Chennai, in Tamil Nadu, where the company said it has invested $285 million in manufacturing operations. Nokia was dethroned as the number ne handset maker by revenue in India last fiscal year after a decade by South Korea’s Samsung Electronics Co. according trade publication Voice & Data.  Nokia’s revenue from India also dropped 18% to 97.80 billion ($ 1.52 billion) in the year that ended March 31.

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