Cliff Notes – Luanne Stevenson – 12/12/2009

DFN: If you haven’t hear Luanne, it’s an absolute must to hear her the next time she speaks at Job Connections. She’s bright, articulate, engaging, insightful, and bubbling with excess energy that will guarantee to let you leave the meeting (at JC) feeling energized and committed to your success.

Luanne Stephenson – 12/12/2009

Ex-DBM consultant
Resumes are a place to start
Day of a 30 year career are gone.
Career transition every 3-5 years.
Transition is a way of life, need to know how to get better at transition.

What do you see yourself having accomplished 12/12/2010.

What obstacles do you see to overcome.

You have to put a stake in the ground.

Talking it through, thinking about it, what is more helpful?

Need to spend time, stay the course.

Start doing something, don’t wait until somethings prefect.

There are things in / out if your control. You need to recognize what’s what.? Embrace and let what you can’t control. Focus on what you can control.
Attitude, network, knowledge base, openness to new things. Don’t use what you can’t control as an excuse.

Score yourself on these segments. 1-10.

1. How satisfied are you with your career transition strategy? (8)
2. Need to take good care of yourself. (5)
3. Are you connecting with people I. Your network. (6)
4. Clear about your goals and initiatives. (7)

5. satisfied with your professional / community involvement. (8)
6. Staying on top of email / voicemail. (7)
7. staying organized. (8)
8. Time management. (7)

Need to clear up clutter, will free up your mind. What do I need to do to increase scores?

Put a stake in the ground re how to do better on the next year. Decide where you want to be, not every thing needs to be a ten.

EXERCISE = confidence, alert

What will you start doing to regain balance in your career transition?

What will I stop doing, reprioritze or delegate?

Prioritize A, B, C do As first. Put dates down on paper. Start or complete date.

Willingness to make commitments on paper a key to success.

EXERCISE = confidence, alert

What will I start doing to regain balance in your career transition?

What will I stop doing, reprioritze or delegate?

Prioritize A, B, C do As first. Put dates down on paper. start or complete date.

Willingness to make commitments on paper = success.

Luanne’s contact info:
Luanne Stevenson, Principal Training Consultant and Career Coach
Pajaro Group Consulting, Inc.
Phone: 925-262-8201


David Einhorn on Poker and Investing

DFN: This is proof that what you put out on this internet, is there forever. If you haven’t heard about David, here’s his ‘bio’.

David Einhorn is President of Greenlight Capital, a "long-short value-oriented hedge fund", which he began with $1 million in 1996. Greenlight has historically generated greater than a twenty-five percent annualized net return for partners and investors. Einhorn is also the Chairman of Greenlight Capital RE, Ltd, a Cayman Islands-based reinsurance company and one of its major shareholders. His name is most closely associated with short selling, namely borrowing a stock for a period of time and selling it, with the intention of later buying back the shares at a lower price. His two most famous short positions are Allied Capital and Lehman Brothers. He is a critic of current investment-banking practices, saying they are incentivized to maximize employee compensation. He cites the statistic that investment banks pay out 50 percent of revenues as compensation, and higher leverage means more revenues, making this model inherently risky. Einhorn is a major contributor and board member of The Michael J. Fox Foundation.

David Einhorn on Poker and Investing – 11/29/2009

From Original Transcript of David Einhorn’s Speech at the Value Investing Congress
Friday, November 10, 2006

When people ask me what I do for a living, I generally tell them "I run a hedge fund." The majority give me a strange look, so I quickly add, "I am a money manager." When the strange look persists, as it often does, I correct it to simply, "I’m an investor." Everyone knows what that is.

When people ask me what I did on my summer vacation, I generally tell them "I played in the World Series of Poker." Nobody gives me a strange look.

So I am at the World Series of Poker in Las Vegas and it is time for a break between rounds. A fellow comes up to me as says, "I am from CNBC and we’d like to interview you." I ask, "About poker or investing?" The fellow looks at me like this is the strangest thing anyone has asked him in a long time; I realize he obviously picked me out due to my large chip stack or, according to my wife, due to my great looks. "About poker" he says as nicely as he can.

Today, I will discuss both. But for this group, who I bet all know what a hedge fund is, I will mostly discuss investing. Investing and poker require similar skills.

Different people approach poker different ways. Loose aggressive types play lots of hands – virtually any two cards – and try to win lots of small pots. They are the day traders of the poker tables. Others play any Ace or any King or any two high cards. They play too many hands, but don’t play them well. These folks can do fine for a while, but get outplayed after the flop by the loose aggressive types who eventually wear them down so that they wind up in a desperate spot playing a decent hand against a strong hand for the remainder of their chips. I would compare them to long-only closet indexers who trade too much. Then there are the rocks. These folks sit around waiting for premium hands – high pocket pairs or an Ace, King. They fold and they fold and they fold. They are going to wait until they know they have a huge advantage. Then they bet as much as they can. It is very hard to beat a player like this. They can last a long time. Once people figure them out, nobody will play them when they do play. So they don’t get the chance to get enough chips in when they have a large advantage. Could this be what is becoming of Berkshire Hathaway?

I will tell you my poker style. It is close to the patient players waiting for a big advantage. I don’t play a lot of hands. But I don’t just wait for the perfect hand. They don’t come up often enough. I try to pick out one or two people at the table I want to play against or who I sense don’t want to play against me. When the situation feels right, I put in a big, aggressive raise with a marginal holding. It is very hard to describe how I know the "feel" and sometimes I get it completely wrong. But to do well in a poker tournament, you have to recognize a few non-traditional opportunities and you need to get people to sometimes fold the better hand. I think we invest similarly. By this I mean that most of our investing lines up nicely in the disciplined, traditional value camp – very low multiples of book value, revenues, earnings, etc., but occasionally we are opportunistic and invest in situations that are difficult to justify under traditional criteria but for one reason or another we believe to be better situations than they first appear.

People ask me "Is poker luck?" and "Is investing luck?"

The answer is, not at all. But sample sizes matter. On any given day a good investor or a good poker player can lose money. Any stock investment can turn out to be a loser no matter how large the
edge appears. Same for a poker hand. One poker tournament isn’t very different from a coin-flipping contest and neither is six months of investment results.

On that basis luck plays a role. But over time – over thousands of hands against a variety of players and over hundreds of investments in a variety of market environments – skill wins out.

My experience at the World Series of Poker was more like what can happen to a very lucky player in any given tournament. It sure was a blast. If I played a lot of poker, I know that over time the real pros would eat me alive. Personally, I think CNBC would be better served to ask me about investing. I think I have more to contribute in that area.

So let’s get to that. How many of you heard me last year? Now how many of you heard someone use the PEG ratio and kind of laughed to yourself when you heard it?

This year, I’d like to talk a bit about ROEs. One of the best investors around, Joel Greenblatt, has written a popular, charming and funny book about investing in great companies at low P/E multiples. To simplify an already simple book, great companies are generally measured as companies that can generate lots of profit without requiring a lot of capital. This means that they have high ROEs.

I recently met a smart hedge fund manager who has built a $10 billion fund around screening for companies with high ROEs and low P/E multiples for longs and low ROEs and high P/E multiples for shorts. The manager adds human analytical effort to confirm that the screened results are not anomalous accounting figures but instead generally confirm the performance of the business. This has been a successful approach.

My two cents on ROEs is that there are two types of businesses: there are capital intensive businesses and non-capital intensive business. Capital in this definition is both fixed assets and working capital. I define a capital intensive business as a business where the size of the business is limited by the amount of capital invested in it. In these businesses, growth requires another plant, a distribution center, a retail outlet or simply capital to fund growing accounts receivable or inventory. Examples include almost all traditional manufacturing companies, distribution companies, most financial institutions and retailers.

I define non-capital intensive businesses as businesses where growth is limited by things other than capital. Generally, this means intellectual capital or human resources. Examples of intellectual capital are in the pharmaceutical, computer software industries and even some consumer goods like Coke, which rely on brand equity rather than shareholders equity. For example, drug companies are generally limited by the composition of their patent portfolios rather than by their raw manufacturing capacity. Human resource companies are the ones known for the "business going up and down the elevator" every day. Most service companies qualify, including almost any company that sells labor whether it be nurses, construction workers or consultants.

I believe that it is irrelevant to worry about ROE or marginal return on capital in non-capital intensive businesses. If Coke or Pfizer had twice as many manufacturing plants, the incremental sales would be minimal. If Greenlight Capital – and here I mean the management company that receives the fees, and not the funds themselves – had twice as many computers and conference room tables we wouldn’t earn twice the fees…in fact, they probably wouldn’t increase at all.

When the capital doesn’t add to the returns, then ROE doesn’t matter. It follows from this that in non-capital intensive businesses

the price-to-book value ratio is irrelevant. The equity of the company in the form of intellectual property, human capital or brand equity is not reflected on the balance sheet. All that matters is how long, sustainable or even improvable the company’s competitive advantage is, whether it is intellectual property, human resources or market position.

For these companies the "reinvestment" question becomes what do they do with the cash. Do they return it to shareholders? Or do they do something worse with the cash? Think of all the beautiful non-capital intensive businesses that have either bought or entered capital intensive areas…mostly because their core business generated more profits than they knew what to do with.

A current example is the investment banks. Think about investment banking. It should be a wonderful non-capital intensive business. People go up the elevator and generate fees. Fees for corporate finance advice. Fees for raising capital. The top firms also benefit from their brand equity as companies actually measure their status by the perceived brand value of their financial advisors. They get still more fees for assisting buy-side customers to execute transactions in the capital markets and serving as custodians for their assets. None of this requires a lot of capital. From there, they can generate more revenue by facilitating customer orders, by committing some capital and by lending them money. So the investment banks become a bit more capital intensive. This has evolved.

Next the banks enter proprietary trading and investing – generally in everything from short-term trades in liquid securities to merchant banking or private equity efforts. All that cash flow from the great non-capital intensive businesses gets sucked into ever growing balance sheets. Before you know it, the investment banks are holding on-balance-sheet assets of 30x their equity in addition to tons of off-balance-sheet swaps and derivatives.

What does all this capital-intensive activity do? It drives down the ROEs. Sure the ROEs still seem good at around 15-20%. But when you consider that underneath all the capital intensive stuff is a wonderful non-capital intensive fee-generating business that should have an astronomical ROE, you see that all the proprietary investing and leverage isn’t adding much to shareholder returns here. The irony of this is that these are the companies that everyone else comes to in order to get advice on corporate finance and capital allocation.

Why did this happen? They say that the reason is to diversify the business to stabilize the results, as the fee streams are too volatile for the tastes of public investors. In my view that is a lot of value to destroy in order to stabilize results that are still pretty volatile.

I suspect a better explanation is the investment banks are run for their employees rather than their shareholders. They are run so that there is just enough shareholder return left so that shareholders don’t complain too loudly and a 15-20% ROE seems to be that level. Of course, the returns could be higher, but around 50% of the revenues go to employee compensation.

Given the risk taking nature of the incremental revenues and the fact that 50% of the revenues go to employee compensation, the investment banks are evolving into hedge funds with…how shall I put this?…above-market incentive compensation fee structures.

We have a company in our portfolio, New Century Financial (NEW), that turned a wonderful non-capital intensive business, the origination and sale of mortgages, and reinvested the cash flows into a mediocre capital intensive business of holding mortgage loans. Worse, they went into the capital markets to raise additional capital to focus on the capital intensive opportunity. I thought this was such a bad idea that I joined the Board with the goal of unwinding this decision and to free the valuable service business from the investment business. It is too soon to discuss my progress.

One non-capital intensive business we like is Washington Group, which provides design, engineering, construction management, facilities and operations management, environmental remediation, and mining services. Most of Washington Group’s contracts are paid on a negotiated cost-plus basis. The plus is either a percentage of the costs or specific performance incentives or milestone payments.

For 2006, Washington Group is guiding to about $2.50 per share. For 2007, the guidance is $2.60-$2.92 per share. The "Street" has taken that guidance at face value and has declared the stock fully valued at $55.

To us, the shares seem less expensive. There is about $8 per share in cash and a tax NOL worth another $7 per share. Backing these out, the business value is about $40 a share.

We think that guidance is overly conservative. Washington Group’s end markets should experience large growth over the next few years. In 2006, Washington Group will grow backlog more than 16%. The estimates imply earnings growth of about the same percentage.

Until recently, Washington Group also participated in "Rip and Read" bidding for government infrastructure projects. Those projects are contracted based on sealed bids from contractors, all ripped open at the same time. The lowest bid wins the contract. This has not worked out very well for them.

When the customers on those contracts request changes or expansions, Washington Group incurs increased costs.

Washington Group will file a claim for the increased expense with the customer, and it is either paid out or litigated in a process that can take several years. Washington Group has historically recovered money on a good percentage of its claims.

Washington Group accounts for these loss-generating contracts with cost overruns by taking a charge for the expenses expected to be in excess of revenue going forward. Future revenue on the contract is recognized at a 0% EBIT margin. Claims are not recognized in earnings until the cash is received, no matter how far along in negotiations Washington Group and its customer are, or how reasonably claim recoveries can be estimated. In effect, Washington Group will have charges in early quarters, followed by quarters with revenue at 0% EBIT margin, and then later quarters with claims revenue at 100% margin. Washington Group does not include claims recoveries in its guidance.

Lately Washington Group has had three particularly difficult contracts with cost over-runs. This has resulted in repeated charges over the past few years. The 2006 guidance includes $32 million in pre-tax charges that have reduced earnings by about 60 cents per share.

There are other accepted ways to account for cost overruns on government contracts. The largest of these contracts, for which Washington Group has recognized $122 million of the losses, is done through a joint venture for which Washington Group has a 50% share. Washington Group’s publicly traded JV partner estimates $57 million of claims recoveries that it has recorded on its books as an offset to the losses. As I mentioned, Washington Group doesn’t book the recovery until it collects the cash.

I believe that a more reasonable estimate for 2007 starts with 2006, adds back the 60 cents of charges and grows the core business by 16%. That puts me at around $3.60 per share or about 11x
conservatively stated earnings that give no credit for claims recoveries. I do not believe this is a peak result. This seems pretty cheap for a non-capital intensive business with above average growth prospects and a history of using excess cash flow to buy back stock. For what it is worth, the peer group trades at 20x more aggressive earnings.

Coming back to my main theme. I believe it is very important to analyze ROE and marginal returns on capital…but only in capital intensive businesses. It may surprise you, but I prefer at the right price capital intensive businesses with low ROEs, where I think the ROE will improve, to high-, or at least medium-ROE businesses.

The problem with high ROEs in capital intensive businesses is that it is hard to sustain the ROEs. Here, high returns attract competition both from new entrants that come with new capital and existing competitors that try to see what the better performing competitor is doing to copy it. The new capital and the copycats often succeed in driving down the superior ROEs. Really bad things happen to earnings when a 25% ROE turns into a 10% ROE.

This is why I prefer the low ROEs. Great things happen to earnings when a 10% ROE becomes a 15% ROE. ROE can improve three ways: better asset turns, better margins and by adding financial leverage. I like to look for companies that can expand the ROEs in as many of these levers as possible.

This brings me to my second investment idea, which is, I hope, a good example of what I am talking about.

Arkema is a diversified generic and brand name chemicals company that was created in 2004 by the French oil & gas giant TOTAL following the reorganization of its chemicals portfolio. Arkema consists of three divisions: Chlorochemicals, which is a mature and cyclical segment; Industrial Chemicals, which is growing and moderately cyclical, and Performance Products, that occupies high-value-added non-cyclical niches. Arkema’s products are used in automotive, electronics, hygiene & beauty, construction and chemical industries. Almost half of Arkema’s revenue comes from outside of Europe and about two-thirds of its employees and capital employed are located in Europe, primarily in France.

Arkema was spun off and started to trade in May 2006 on the Paris Stock Exchange under the ticker AKE FP. TOTAL management, more focused on its highly profitable oil and gas businesses, had under-managed the "non-core" Arkema segments that have generated margins considerably lower than its pure-play peers.

Arkema currently trades at €38 per share, which translates into a market cap of €2.3 billion and reflects a valuation of 1.2x book value, which was almost halved by a slew of write-downs and provisions in the three years preceding the spin-off. Arkema currently trades at 38% of revenue and 4.9x our estimate of 2006 EBITDA, representing an industry low multiple of a depressed EBITDA result, caused by an industry low 7.7% margin.

We like Arkema because it has a great opportunity to improve its ROE through improving asset turns, margins and, if it is inclined, by adding leverage.

Arkema was spun off with working capital of 23.6% of sales. Industry peers operate in the mid-teens. If Arkema can shrink this number to 17% over time it will free up cash in excess of €6 per share or alternatively, it could grow revenues by 39% without requiring working capital. Arkema should also be able to expand asset turns as it holds €220 million or almost €4 per share of construction projects that are not yet producing. As these come on line, Arkema will get the revenue and income benefits from these investments that have already been made.

Additionally, Arkema has a good opportunity to expand its margins, as Arkema’s recent "recurring" operating results had significant embedded undisclosed one-off costs depressing these results. The Industrial and Performance Chemicals divisions, Arkema’s two largest, which account for 75% of revenue and all of EBITDA, have had average margins over the last eight years that were significantly higher than recent levels. Arkema’s most comparable company, Degussa, has operating margins almost three times Arkema’s recent results.

We believe that just with the return of Arkema’s two largest divisions to their historical long-range profitability and a modest fixing of its troubled Chlorochemicals division, Arkema should be easily able to expand its EBITDA margin to 10% which would imply only 3.6x "reasonably achievable" EBITDA. After executing an authorized buy-back for 10% of its shares, such results would demonstrate €5 in EPS, implying a 7.6x P/E, and a 12% ROE. This is a dramatic improvement from what we think this year will be €2.50 in EPS and a 7.6% ROE. As I dream into the distant future of possibilities, if Arkema achieves Degussa’s margins, they would earn €8.60 per share, implying a 4.4x P/E, and a 20% ROE.

So I went back to the CNBC reporter and asked him to read my speech and summarize it with a title. He read it, thought long and hard, and came up with Winning Poker Strategies from an Investor. I looked at him in the same confused way he had looked at me back in Vegas. So I’ve come up with an alternative title for today’s talk: Financial Learnings for Make Benefit Glorious Wiseguys.

2009 / 2010 Employment Observations from Accounting Partners

DFN: Job market assessment by Ted Maccauley, President of Accounting Partners, and a fellow UCLA Alumnus.

Forwarded message
From: Ted Macauley <tmacauley>

Date: Mon, Dec 7, 2009 at 11:14 AM
Subject: 2009 / 2010 Employment Observations from Accounting Partners
To: dfneeper

Good morning. My name is Ted Macauley and I am the President of Accounting Partners. As you are probably aware, we are a specialized financial recruiting firm based out of San Jose that staffs positions on a contract, contract-to-hire and Direct Hire basis.

As 2009 draws to an end, I wanted to reach out to you to wish you well during the Holidays and wish you good luck heading into 2010. Many of you have asked me for thoughts on the employment market, so I wanted to briefly share some of our observations from the front line.

Overall, as a company, we saw a very difficult 2009, culminating with a low point in demand during the middle part of the year. This was followed by a slight pick up, at the very end of Q3 which didn’t materialize into a significant recovery. Q4 has been fairly flat with some signs of improvement and with many employers still pushing off hiring into 2010. While history has taught my firm that simply changing the numbers on a calendar from one year to the next doesn’t translate into a recovery, there are many signs pointing towards a 2010 recovery. Specifically, three items stand out:

  1. Job Losses — In November, employers trimmed the fewest jobs since the beginning of the recession and the unemployment rate posted the bigget one-month decline in more than 3 years.
  2. In October the average work week increased to 33.2 hours versus 33 hours. While this doesn’t sound like much, it is important because it is a sign that employers that cut the hours of their workers were starting to restore these hours. This is the biggest jump in 3 years.
  3. Temporary worker increase — There was a monthly increase of 52,000 temporary workers, which is the biggest jump in 5 years. Employers will hire temporary workers back first before hiring full time employees. While 200,000 – 300,000 added monthly temporary workers are needed for a real improvement, we need to walk before we can run. According to the CEO of Adecco ( world’s largest staffing firm), these levels should be reached in Q2 2010.

Many candidates we speak with are finding jobs on their own through networking. As a company, we live and breath LinkedIn ( If you do not have an account, I would highly advise you to set one up. It is free and it allows you to connect professionally with others in your field. Simply go to and it is easy to sign up. Once you have signed up, feel free to connect to my profile ( search on Ted Macauley ) as I have taken the time to build a network that can link me to over 14M people. Additionally when I get a search that I am working, I post it to my linkedin update as well as to twitter (

If you are a LinkedIn Member, I would appreciate it if you would vote on the employment poll on my profile as I would love to get a sense of how job seekers view the market.

Happy Holiday and I truly believe that 2010 will bring us much more joy than 2009.



Ted Macauley


Citi’s Pandit is the Right Man For the Job – at Bank of America

DFN: A none too complementary piece about Citibank’s Pandit.

Citi’s Pandit is the Right Man For the Job – at Bank of America
By Martin Hutchinson, Contributing Editor, Money Morning

Bank of America Corp.’s (NYSE: BAC) search for a new boss to succeed the deposed Kenneth D. Lewis had ground to a complete halt. Nobody was willing to take the job for the compensation the Obama administration’s "Pay Czar" was willing to authorize.

Now Bank of America is repaying its Troubled Asset Relief Program (TARP) funds in order to get out from under the pay czar’s tyranny, in the hope the big bank can attract a worthy chief executive officer. That’s a good strategy, and it just might help BofA attract the most obvious candidate of all: Vikram S. Pandit, the embattled (and $1-a year) CEO of Citigroup Inc. (NYSE: C).

Pandit got the Citigroup job after 11 years at Morgan Stanley (NYSE: MS) and founding the Old Lane hedge fund, which Citi bought for $800 million – only to shut down less than a year later.

Typical Citigroup decision. It paid $800 million, when even in 2007’s frenzied market you could have landed a head of investment banking (Pandit’s first job) or even a CEO (which Pandit became in December 2007, two months after he was hired) for probably a quarter or a tenth of that amount.

The entire transaction was staggeringly financially inefficient – Pandit himself got only $165 million of the $800 million, so the other $635 million was sheer waste. And at least for the top job, it hired the wrong guy.

Pandit’s tenure at Citigroup has been marked by disaster after disaster, culminating in a record-breaking bailout that has left the bank 36% owned by the U.S. government. Most of this isn’t Pandit’s fault. Banking disasters generally take a long time to arrive, and the dodgy subprime mortgage deals and investment banking flim-flam that brought Citi down were almost all committed before Pandit joined the bank – indeed many of its problems stretch back several decades.

Even as Citi is asking Pandit to turn Citi around, the CEO’s salary is set at $1 for 2009 and whatever the pay czar decrees for 2010.

Pandit is a very smart guy. But he’s not the right guy to run Citigroup because he has the wrong background.

Citi has an investment banking capability (his strength) – but it’s not a very good one. Citigroup bought Salomon Brothers and Smith Barney – two big investment banking names – in the late 1990s. But it lost many of the good people at Salomon (which was already troubled by scandal and well past its best when Citi bought it).

Then there’s Smith Barney. In the turmoil last winter, Citi sold 50% of it at a knock-down price to Morgan Stanley, so Citi really doesn’t control it any more. Citi spent $11 billion on expansion in 2007, buying the No. 2 Japanese broker Nikko Cordial (PINK ADR: NIKOY), but has now sold that, too.

So, in an ideal world, the best solution for Citi’s investment banking would be to sell it or close it, before it finds a new way to lose a fortune, probably at taxpayer expense.

Citi’s non-investment banking business, on the other hand, is huge, very valuable, and located all over the world. It has a bank in Brazil that is thinking of doing an initial public stock offering (IPO) – following the highly successful, $8 billion IPO of Banco Santander SA (NYSE ADR: STD) in October.

Citi owns the largest bank in Mexico, Grupo Financiero Banamex, SA de CV, which it bought in 2001. It has big operations in Korea and Japan. And it has one of the largest credit-card operations in the United States.

That’s a hugely complicated mishmash of businesses – so complicated, in fact, that it may be impossible for anyone to manage. But the bottom line is that we’re talking chiefly about retail and commercial-banking businesses, all of them very much brand-based, the whole of which is pretty much irrelevant to Pandit’s experience and knowledge base.

Bank of America is a very different animal, however. At its most basic level, BofA is an overgrown, Charlotte, N.C.-based regional bank, with simple businesses in consumer and corporate banking (the former North Carolina National Bank).

NCNB, by then calling itself NationsBank, bought the former Bank of America in 1998, but Bank of America, a rival to Citi in 1980, had survived a near-death financial experience in the 1980s and been forced to sell off most of its complicated bits and starve the rest of capital.

So going into 2008, Bank of America was primarily a huge-but-simple U.S. bank – with an investment-banking operation that was somewhere between a second-tier operator and a joke.

In January 2008, BofA bought Countrywide Financial Corp., the leading U.S. mortgage originator, a catastrophically stupid deal, but one in a sector in which BofA already had oodles of experience. Then, in September 2008, BofA seized a golden opportunity and bought Merrill Lynch, a hugely important investment banking franchise.

Superficially, now, that mix may look similar to Citi’s. But it isn’t. The old BofA is a fairly simple business, and is filled with experienced folks who understand how to run it.

That’s not anything like the situation at Citi, where all the non-investment-banking businesses are a highly complex collection of businesses that may, indeed, be impossible to run as a coherent whole.

By contrast, BofA’s Merrill Lynch invest-banking-business is a crown jewel, albeit one that has been tarnished by its own mistakes in the mortgage market. But Merrill Lynch may well disintegrate, with its best people leaving, as happened at Salomon and Smith Barney after Citigroup bought them – investment banking types don’t like being told there’s a pay czar monitoring their bonuses. That would not only ruin Merrill’s value, it would transform it into an unfixable business.

That’s where Pandit comes in. He doesn’t have to worry about his experience deficit with the "old" BofA (the former NCNB), because he doesn’t need to – it has the talent pool in place to run itself.

But Pandit does have the skills that are so badly needed to run the Merrill Lynch investment-banking unit. More importantly, Pandit has the skills needed to keep Merrill Lynch disintegrating, if anyone can, and his appointment would show the Merrill Lynch guys that BofA’s board of directors really care about them.

And having made $165 million in his Citigroup hire, Pandit will be perceived as being more sensitive than "mere" commercial bankers when it comes to the delicate and lucrative question of investment-banking bonuses.

Bingo. Problem solved. I look forward to being appropriately rewarded. The average top headhunter’s fee is one third of first year’s salary – and no, if Pandit agrees to work for $1 a year, a 33-cent recruiting fee won’t suffice!

[Editor's Note: As this commentary underscores, Martin Hutchinson understands what makes the capital markets tick. That's why he's excelled at finding the so-called "hyper-profitable" investment plays that he writes about for subscribers of his Permanent Wealth Investor trading service. In a new report, Hutchinson not only uncovers the very best profit plays available today, he guarantees triple-digit gains. For more information, please click here.]

Not All Interivews Are the Same

DFN Good insights into the purpose of interviews.

Not All Interviews Are The Same…Be Aware
Posted: 08 Dec 2009 11:35 AM PST

Few jobs are attained without having to go through multiple interviews. We all have had to prepare for interviews but how many of us actually prepare for multiple interviews differently? Be aware that you need to, because not all interviews are the same, nor are the people who are you interviewing you looking for the same thing. Let’s go through three different interviews and see if we can’t learn something about the differences of each session:

The First Interview aka “The Screening” – The first interview in most companies is not done by the decision-maker. Instead we are paired up with someone from Human Resources or someone from the team who has been put in charge of recruiting. Because of this, the first interview is seldom about our technical skills or our competency in doing the job. Instead, this interview is about being screened for fit with the company’s culture and the company’s “success pattern”. The interviewer is trying to match our career pattern with those who are most successful in the company. The pattern is how fast we have moved up, how many jobs have we had, how long have we stayed in a job, etc. On the cultural side it is about our values, principles and priorities versus the company. The interviewer is going to spend most, if not all, of the time on these areas. In this interview, all will go better if we are listening carefully and have done our homework (like looking at the interview reviews and questions on to get a good feel for the company and people who are successful. It sounds superficial but, as an example, if the culture is one of ex-athletes, it sure doesn’t hurt for the interviewer to know that you are a sports nut and stay active.

The Second Interview aka “Can We Work With You?” – Congratulations, you made it through the screen. Now you get to meet people who you will be working with and you may even meet the decision-maker in this round. If you do, then you should know who that is before you go into the interview meetings. It’s okay, ask your initial recruiter who that is and also ask for the coaching on how best to impress her/him. For all the rest of the people in this interview round they are looking at you to see if they can work with you. This can mean, how much do you know, how hard will it be to bring you up to speed (translation…how hard are they going to have to work at training you), how do you work on a team, how serious do you take yourself versus them, are you going to be a partner or a competitor? This is the time to go deep with your skills, competence, ability, and how you work with others. The consensus meeting will be all about what you can do and how you do it.

The Last Interview aka “Please, Keep Me From Having To Veto My Team” – The final interview is with the decision-maker who has been debriefed and prepped on you. This can happen on a separate day or be the last interview of the second round of interviews. Either way, this interview is very important. You have gotten to this stage because everyone either loves you, or there was enough of a consensus to get you one more 30 – 60 minutes meeting . The decision-maker will usually come into this interview wanting to like you because if she/he doesn’t then there is going to be a conflict and he/she is going to have to run against the grain with the team and who wants to do that? Plus, the decision-maker is going to have to defend their reasoning if they ding you. They just can’t come out of the meeting and say, “I just didn’t like…” What you can do to make this interview successful is to be sure that you are connecting with this person. He/she needs to feel like you will be good on the team, that you really want the job and that you have learned something throughout the interviews. This is the time to play back what you have heard and put your own stamp of thinking, skills and accomplishments on the goals and objectives of the company and/or the department. If the decision-maker sees you as a key person to get the bigger job done, then that is great. The more you can connect at this level then the more she/he is going to come out of the meeting with a “thumbs up”.

Always be sure to think and prepare ahead for each interview differently!

Will Telcos Embrace OTT Video in 2010?

DFN: The outcome of this issue will have implications for NextG Networks.

Will Telcos Embrace OTT Video in 2010?

December 8, 2009 | Carol Wilson

Will 2010 be the year broadband service providers add over-the-top (OTT) video services to their product portfolios?

A number of video services players are saying "Yes." They expect current customers to go public, and for more network operators to use their DSL or cable broadband pipes to offer value-added video services without building out an IPTV system.

But many of those pursuing service provider partners admit it’s still early days for such deployments, even though the OTT video specialists are hardly new kids on the block: For example, Sezmi Corp. has been around since 2006 and has been promoting its OTT platform since May 2008. (See Sezmi Aims Beyond IPTV.)

The challenge players such as Sezmi, ZillionTV Corp. , Roku Inc. , and TiVo Inc. (Nasdaq: TIVO) face in working with broadband ISPs is getting the business case right.

And these four players, at least, are also doing direct sales to consumers, while trying to avoid competing with their own partners.

"I think we’re all trying to figure this out together," says Jim Funk, vice president of business development for Roku, which has had marketing trials with telecom service providers for its over-the-top set-top.

"The important thing we’re doing is working with these companies to try to determine what the business model looks like," notes Funk.

What broadband ISPs can’t settle for, advises Danny Briere, CEO of the TeleChoice Inc. consultancy, is just selling a fatter pipe, while allowing other players to reap the rewards of selling value-added services.

"They need to have control of the platform," says Briere. "If you have a box on someone’s desk that can let you do other things — offer other services — and you have direct control over that box, then there’s a business case to be made."

Sezmi said in November that it already has service provider partnerships up and running and expects to make announcements in early 2010. (See Sezmi Launches Video Services Pilot in LA.)

And the company’s founder is already predicting major success next year in ousting satellite and cable providers. (See Sezmi Founder: We’ll Replace Cable & Satellite TV .)

Sezmi is also planning to announce a "major national retailer" as a partner, and will be selling its Sezmi boxes directly to consumers, who will then hook it up to their standing broadband connections.

ZillionTV’s mixed model
ZillionTV, meanwhile, is trying to keep its service provider customers under wraps for now, although one, Nsight in Wisconsin, broke ranks and went public. (See Nsight Takes ZillionTV on a Test Run .)

"We’re trying to be very thoughtful as to how we roll this out," says Mitch Berman, executive chairman of ZillionTV. "All of our telco partners are very focused on getting this right."

Berman admits the economic slowdown has hurt his company but maintains that ZillionTV’s decision to also sell direct in some areas isn’t a reflection on how well (or poorly) sales through service providers are going.

"We are targeting pods selected across the country," he says. "We haven’t flipped a switch and said, ‘Everybody come and get it.’ "

ZillionTV continues to focus on its strengths — no subscription fees or costs to get the consumer device, advertising support based on personalized interest choices, with reward points for viewing ads — and believes the shared revenue model will work.

But in areas where consumers have signed up on ZillionTV’s Website, and there are no service provider partners, direct sales are being done by direct invitation to interested consumers. "We won’t be doing that in areas where we have partners — it’s a controlled thing," states Berman.

Roku considers customization
Roku has been selling its popular players to consumers through Inc. (Nasdaq: AMZN), but it’s started pursuing partnerships with broadband ISPs as another way of getting its product to market, Funk says.

To date, there have been a few marketing partnerships, but no announcements. "We’re discussing ways we can customize what a service provider’s customer base would see: Would there be some content that is more closely aligned with what the service provider wanted to offer, or branding to give a better sense of a relationship between Roku and [the service provider]?"

Roku’s new open platform is expected to be of more interest to service providers, believes Funk, and TeleChoice’s Briere agrees. (See Roku ‘Channel Store’ Is Open.)

"What Roku does, at a very low price point, is have an open programmable platform that a service provider could put its own skin on, and offer links to local businesses and services," says Briere. "The idea is to get beyond providing TV to the masses and make sure you have a social and interactive and revenue-generating experience with your customers."

Roku’s Funk says his company is trying to help service providers find other kinds of things they can offer once they have a broadband connection in the home and a network established that links the PC and TV. The possibilities include local video content or even adjunct services, including security.

Don’t be dumb, says TiVo
TiVo is hardly known for its work with broadband service providers, but at Supercomm 2009 this fall, CEO Tom Rogers challenged service providers to team up with companies like his to offer content over their broadband pipes, or risk being relegated to dumb pipes delivering everyone else’s content.

TiVo already sells its content service — which now includes five million items, including Web-based video, in addition to consumer-recorded content — to cable companies including Comcast Corp. (Nasdaq: CMCSA, CMCSK) and Cox Communications Inc. as a software upgrade to their set-top hardware. RCN Corp. (Nasdaq: RCNI) will be offering TiVo’s box next year. (See TiVo Adds Free Web TV Fare, RCN Makes TiVo Its Dominant DVR, and TiVo Covers Its Cable Bases .)

TiVo doesn’t yet have similar relationships with telcos, but it’s exploring those, says Tara Maitra, the company’s vice president and general manager of content services.

"What we’re looking to do is grow the TiVo distribution, whether or not it’s a TiVo hardware and software model, and telcos are certainly a big part of that strategy," says Maitra. "We have strong penetration with cable operators, and we have our relationship with DirecTV Group Inc. (NYSE: DTV). Telcos are the next logical place as [they are] a growing distribution channel." (See DirecTV & TiVo to Play It Again .)

The business model isn’t yet firm, but could include telco licensing of TiVo DVRs and distributing them along with their broadband services, according to Maitra.

— Carol Wilson, Chief Editor, Events, Light Reading

Determining Corporate Culture

DFN: Rob gives good advice on how to discern the ‘culture’ of a corporation. How well you’ll fit in and how happy you’ll be are every bit as important as that paycheck your next ‘gig’ will bring.

5 Ways to Determine Corporate Culture
Posted: 08 Dec 2009 07:08 PM PST
By CAREEREALISM-Approved Expert, Rob Taub

Many companies today promote building teams over individuals; respecting the entry-level mailroom clerk and the top salesperson equally. They consider failure the beginning not the end of developing talents and careers and that ‘Values’ are not fads. Still in other companies you will find a lack of esprit de corps where departments operate as fiefdoms and do not work in partnership with one another; where leadership is assigned not earned; where secretaries still bring their bosses coffee ala the 60’s, and where you are only as good as your last sale. This is “Company Culture”.

Here is my list of tell-tail characteristics of company culture. Learn what you are getting into before you accept your next position.

1. Key Job Aspects & Workplace Characteristics
Determine to what degree the following will play a role in the job and the workplace. One way or the other, combined, they all play a role in determining culture. Tip: Assign a value from 1 to 5, 5 being the highest degree you require for your job satisfaction. There are many more aspects of a job and workplace you may want to consider. This is only a short-list to start you thinking.

Workspace design
Personal items in the workspace
Professional Development
Defined career paths
Employee interaction
Esprit de corps

2. Company Website
Some companies promote themselves by discussing their corporate culture on their Website or in their annual report (usually on the website if flattering). On its own, the web site may not be “telling” enough as it is the company selling itself. However, combined with other tail-tale characteristics it can be valuable.

3. Other Characteristics to Look for in the Workplace are,
How decisions are made
How decisions are communicated to the employees
How employees are recognized
Interaction among departments
Interaction among managers
Interaction among top management

4. Researching Behind the Scene
Using LinkedIn, Facebook, MySpace, Twitter and other social media and networking sites, try to connect with people from the company and get their perspective on culture. I like to ask a few questions in particular. They are,
What 5 key words or key phrases best describe your company?
What would you guess would be the 5 key words or phrases that your (husband/wife…) would use to describe your company?
What is your favorite day of the workweek? Why?

5. Other questions you can ask employees are,
Do you feel your work there, your contribution, is important? (Everyone says “yes”) How do you know?
Are you encouraged to spend time on training and education outside the office?

Finally, how the company measures up to your Best Company Culture profile is very personal. Teamwork, for example, may be a lot less important to you than the flexibility of telecommuting. Define the motivators and incentives that are important to you in the job and the workplace; define that which inspires you most. It may be a code of ethics or glittery perks that dazzle you. It’s for you to define, and this will start you off in the right direction.

Hope this helps!

Rob Taub, MBA, CCM (Credentialed Career Master) and CAREEREALISM Approved-Expert, is a 25-year veteran in the job searching and career marketing field, helping recent grads, young on-the-rise professionals, and mid- to senior-level managers and executives with individual job searches and career transitions. Rob is Principal at Job Search Corner and creator of the blog Job Searching with Rob.