| Firm | Status | Analysis |
| Acer | Buy |
Led by the
inimitable Stan Shih, one of the canniest high-tech entrepreneurs around,
Acer is rapidly succeeding in its avowed quest to become the Sony of
Taiwan. After navigating the 1997-98 Asian crisis with surprisingly
minimal damage, Acer has continued to pad its excellent position in the
notebook and PC biz, and has started to branch out from low-margin
peripherals into software and services. |
| Allianz | Buy |
While Rolf Breuer has been stealing the headlines, Allianz, the cybernetic spider at the heart
of Eurocapitalism, has been quietly spinning silicon webs -- and netting
serious prey. After gobbling up Dresdner and streamlining its hugely
profitable industrial holdings, will open rivalry break out between the two
titans of Central European finance? |
| AXA | Buy | Europe's largest
bancassurance firm was long one of the key keiretsu financiers for the
French economy, and is now expanding by leaps and bounds throughout
Europe, the USA, and even Asia. The Euroinsurance market is
consolidating very quickly, and chances are good that Axa, along with
Allianz and Generali, will end up at the top of the heap. |
| BNP | Buy |
One of France's biggest and best-run universal banks, the product of BNP's
takeover of Paribas. |
| Canon |
Buy |
Canon has gone from strength to strength by staying tightly
focused on all aspects of the imaging biz, from high-end steppers
and printers to low-end scanners and digital media. High rates of
investment in R & D and forwards-thinking management have combined to make
Canon worthy competition for HP. |
| DaimlerChrysler | Buy | The
EU's premier industrial firm is currently the most profitable in the world,
but this didn't happen by underpaying their workers and overpaying their
management. Management cannily used mid-90s losses in the aerospace and
electrical fields (the write-offs of acquisitions Fokker and AEG) to
divert dividends into a bold expansion into small and medium-size cars,
plus intelligent investments in power-cell technology and new Airbus
models. After purchasing one third of the US auto industry, Daimler took a
36% stake in Mitsubishi Motors. Daimler is also to be commended for
putting the screws on Chrysler's bloated management, who have
not to date shown the sort of dedication, performance and commitment to
quality that their ordinary line workers have long shown; watching Bob
"Export Biz? What Export Biz?" Eaton being eased out has been almost as
much fun as watching Rolf Breuer dust off the highly overpaid CEO of
Banker's Trust. Long live intra-capitalist rivalry! |
| Deutsche Bank |
Buy | What
Germany doesn't know about global banking could fit onto the e-beam of an
ASML stepper. Deutsche Bank is the main keiretsu banker for Daimler,
ThyssenKrupp, Metallgesellschaft, and countless other Central European
firms. The current management team is headed by the inestimable Rolf
Breuer, one of the smartest Eurobourgies around. You have to hand it to
the Eurobankers: though they're as greedy as any capitalist elite, they've
pursued canny, far-sighted and thoroughly pragmatic policies, carefully
avoiding speculative excesses and building up the industrial potential of
Europe, to the point where the euro is due to become the next world
reserve currency. Asset growth of around 15% a year will, inconceivable as
this may seem, be maintained in the coming years, as Deutsche Bank's
monstrous earnings margins and the newfound strength and creditworthiness
of the euro translate into a spate of global acquisitions. |
| Fujitsu |
Buy | One of the premier
electromultis around, Fujitsu has been a consistent leader in terms of
systems integration, pioneering the art of selling PCs with bundled
software in the early 90s, and is well on its way to becoming the largest
e-commerce provider in Japan. Recently, Fujitsu has seen the freeware
writing on the mainframe wall, and is moving out of Big Iron into
high-end markets (e.g. communicaton ASICs). |
| Hewlett-Packard | Sell |
[Note to readers: the following blurb was written a few weeks
before HP's truly demented plan to merge with Compaq was announced.
Everything we've seen about the merger -- check out Reg reporter Andrew
Orlowski's devastating article on the
Chainsawing of Cupertino -- confirms our analysis in spades.] Woe,
woe is the American Empire. HP was once a superb company, which invested
in its employees, technology and future. But since the early 1990s Bill
and Dave have retired, and pin-headed marketeers who wouldn't know a
toaster oven from a bus pipeline have taken over the boardroom. There are
still glimmers of the old HP -- management took major hits in the current
restructuring, for example -- but 6,000 employees are discovering the
bitter truth of information capitalism: they earned HP billions of dollars
during the firm's glory years, but when times are tough, they're suddenly
as expendable as yesterday's x386 architecture. |
| Hitachi | Buy | The Titan of
Japanese electronics engineering, with unsurpassed cash reserves and
resources, Hitachi lost money for the first time in its recorded history
in 1998. So why buy this stock? Because, as insiders will tell
you, Hitachi is only beginning to globalize its production base; 69% of
its revenues come from the Japanese market. Hitachi's tech remains
world-class, its business strategy fundamentally sound, and it's
sitting on vast cash reserves (debt is around 15% of annual revenues).
Hitachi is merging its DRAM biz with NEC, and plunging into higher-end
markets (especially SH microprocessors, being codeveloped with feisty
EU chip firm STMicro for digital appliances). Intel, beware! |
| Intel | Sell | Yes, they have
profit margins of 25%. But not only are Intel's layoff-driven employee
policies among the most noxious on the planet, it's also a world-class
polluter and, until AMD's resurgence, a
near-monopolist. As someone else said, somewhere, only the paranoid survive. |
| Mizuho Bank | Buy | The product of a merger
between Dai-ichi Kangyo Bank, Fuyo Bank and the Industrial Bank of Japan
into a megakeiretsu, with total financial assets of somewhere north of
1.6 trillion euros. The group's associated industrial firms have annual
revenues of around 570 billion euros (the weighted equivalent of an
eighth of the entire Japanese economy). After hideous losses during
the height of the Japanese banking crisis, the group has bounced back
nicely and is once again making money hand over fist. Wall Street
analysts, with the world-historical stupidity of rentier hacks who've
made an art form out of failing to see the East Asian silicon jungle for
the flying DRAM chips, sneered at the deal as 'essentially defensive'.
Yeah, and Godzilla's little visits to Akihabara were just window-shopping, right. |
| NEC | Buy | As we predicted, NEC, the
main electronics firm of the powerhouse Sumitomo keiretsu, recovered
quickly from the Asian crash and has been piling on the earnings. As
recently as 1999, the DRAM biz was in the pits and Wall Street
analysts were throwing brickbats at NEC, one of the planet's topnotch
electromultis. But NEC responded not by stiffing its workers, but by
slashing the pay of senior management by 20% and making smart long-term
moves in its product palette (i.e. closed down its unprofitable Packard
Bell subsidiary, merged its DRAM biz with Hitachi, and rolled out its
in-house line of 64-bit T-Rex microprocessors). The number of times an
American CEO of a Fortune 500 firm ever took a pay hit during a
restructuring can be counted on the fingers of a three-toed sloth.
Expect mongo returns from NEC's move into network chips and cellphones. |
| Nestle | Buy | One
of the largest and best-run consumer goods and foods multis around.
Consistently forwards-looking strategy and wise investments in Southeast
Asia and Eastern Europe will pay mongo dividends in the next twenty years.
Also beginning to diversify into consumer pharmaceuticals (e.g. Alcon).
Has a noxious habit of selling infant formula to Third World countries,
but what's a few
hundred thousand dead humans compared to a 25% annual return on equity? |
| Nokia | Buy | Finnish socialism is a
beauteous thing to behold. Nokia's success is not just testament to canny
marketing, a highly egalitarian company culture, and a well-constructed
all-digital product push which is turning the humble phone into a mobile
Web device, but to EU industrial policies, too, particularly the GSM
telecom standard which allowed EU firms to seize advantages of scale
before US competitors. Look for Nokia's success to galvanize the entire EU
chip industry, particularly in the telecom and networking sectors. |
| Novartis | Buy | The $21 billion
product of a merger between Ciba-Geigy and Sandoz, this firm has an
unbelievable position in pharmaceuticals, medical technologies, and
genetic engineering, plus some of the juiciest profit margins (around 20%
of revenues) of any major pharma-multi around. The Swiss know their drugs, eh? Novartis has been getting
into the biotech biz recently, and ran headfirst into some serious Web-politics -- to wit, Greenpeace
posted up a parody of Novartis' official site warning about the dangers of
unrestricted genetic manipulation, using a similar-sounding domain name.
Subsequently, Novartis agreed to have an open, public debate with its
opponents over the thorny issues involved in genetic engineering, over at
www.genetics.ch, and Greenpeace has
agreed to recycle the domain in question to Novartis -- a fine example of
Central European democracy at work. For an interesting insight into what
the Swiss bourgeoisie are like these days, check out the latest commercial
and artistic doings of the Sandoz
Family Foundation, which owns 4.2% of Novartis' shares. |
| Sumitomo-Mitsui Bank (SMB)
| Buy | Yet another of the mighty
super-keiretsu spawned by East Asia's dogged and determined rise to
co-hegemony along with the EU (the others being Mitsubishi, UFJ and
Mizuho), SMB is the product of a merger between Sakura, the house
bank for the Mitsui group, and Sumitomo, house bank for the
keiretsu of the same name. Together they form a financial
Ueberbeast of 899 billion euros of assets, plus the assorted
cross-holdings of two industrial groups with a combined annual output of
somewhere north of 1.5 trillion euros. After heavy losses, SMB has
returned to profitability. Note that Sumitomo Fire & Marine and Mitsui
Fire & Marine are merging, the first in a series of inter-keiretsu
fusions. |
| SAP Inc. | Buy | The EU's premier
software firm kicked into warp drive three years ago. Founded by three
ex-programmers from IBM Germany, SAP specializes in Intranet software for
enterprise resource planning, but is branching out at lightning speed into
business and Internet services. Their R/3 platform combines payroll,
inventory, research and design, and shopfloor data into a single network,
and is multilingual and multi-currency-compatible. It's truly one of the
finest pieces of business software out there today, running everything
from airline scheduling systems to Mercedes factories. SAP has a joint
venture going with Intel and has also been networking with Microsoft and
the other heavyweights in the field of Internet commerce. |
| Siemens | Buy | The EU's biggest
and best-run electromulti, with Toyota-sized cash reserves and excellent
positions in the smart card, telecom and chip biz. Far from resting on its
laurels as one of the premier electrical equipment and power plant
producers around, Siemens has been making smart long-term moves to keep
pace with the East Asian competition, by spinning off its DRAM division as
Infineon, merging its computer biz with Fujitsu, and floating its
components biz as Epcos. Look for them to get into the microprocessor biz
in the near future, possibly in tandem with AMD, or possibly with Fujitsu. |
| Sony | Buy | Remains the class of the
field in entertainment and electronics, with hit products everywhere from
the film and music biz (Sony was the distributor for Cypress Hill) to
videogames (via the Playstation 2) and PCs. Though Sony doesn't have the
sheer cash reserves and industrial muscle of some of the other Pacific Rim
electro-multis, it's consumer-based product line generates correspondingly
higher earnings margins. |
| STMicro | Buy | One of the
brightest stars in the glittering pleiade of high-tech firms
being spawned by the EU's fast-growing developmental state,
STM carved out a lucrative niche in non-PC chip markets (especially
automotive applications, set-top boxes, and smart cards). In the
future, expect STM's tightly focused product palette, integrated
platform strategy and no-nonsense, quality-oriented management
to be replicated by countless other small to medium-size French
and Italian firms. |
| Mitsubishi Tokyo
Financial Group | Buy | Deutsche Bank finally has some competition.
The financial nexus of the stupendous Mitsubishi keiretsu, with
747 billion EUR of rocksolid assets. Finally finished cleaning up
its Bubble-era portfolio of bad debts, expect 10% annual growth
as MTFB begins to flex its muscles as one of the premier global
universal banks. |
| Toshiba | Buy | This 49 billion
EUR Japanese firm remains the class of its field in electrical
engineering, semiconductors, microprocessors and laptops. After a brief
slowdown due to the recent Asian crisis, expect 8% annual revenue
increases as the firm plunges into the software biz (via a 3 billion EUR
Web initiative) and increases its strangehold on the PC business. Toshiba
already makes the best laptops on the planet, and is moving quickly out of
DRAMs and into high-end MCUs (e.g. the Emotion Engine, the core of Sony's
eye-popping Playstation 2, as well as a new line of 64-bit RISC processors for
embedded apps). |
| Toyota | Buy |
This firm invented the whole concept of small-lot, high-volume industrial
production back in the Sixties, and is today one of the few auto companies
with the resources, liquidity and sheer engineering excellence to hold its
own with Daimler. Analysts estimate that Toyota has accumulated an
astonishing 28 billion EUR in financial assets; sales have passed the 100
billion EUR mark. Toyota has recently caught the Green bug and is making
significant investments in fuel-cell and battery technology. |
| UBS | Buy | The product of
a merger between Swiss banking behemoths the Union Bank of Switzerland and
the Swiss Bank Corporation has almost $650 billion in assets and
generous profit margins. Strong positions in insurance and industrial
banking, and expect major new acquisitions in the near future as the
European financial sector rapidly consolidates (note that UBS is the actual
name of the firm, not an acronym for United Bank of Switzerland). |
| United Financial of Japan (UFJ) |
Buy | The product of a
three-way merger between Sanwa Bank, Tokai Bank and Toyo Trust &
Banking, UFJ has shed the bulk of its bad loans and returned to
profitability as one of the Big Four universal banks of Japan.
Sanwa's extremely capable management is taking the lead in transforming
UFJ into one of Japan's Big Four universal banks. |
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