Showing posts with label IPO. Show all posts
Showing posts with label IPO. Show all posts

Wednesday, December 12, 2012

Those spaceships are long lost!


The IT bubble burst long back, and with it, did many fortunes...

The last decade of 1990s was a dream run for internet start-ups, and anything even faintly related to “.com” syndrome would be lapped by investors like hot cakes, without paying much heed to what the company does or the kind of potential it holds. This was where the bubble began, and this was in itself responsible for its bursting! It began in 1995, peaked on March 10, 2000 when the NASDAQ reached 5,048.62 points before bursting... During this entire period, the stock markets of US and other western countries saw the bulls in total control, especially with regards to the Internet and technology companies. Moreover, most of the Internet companies that were aggressive during these times were financed either by VCs or IPOs. And when this bubble burst, there was mayhem at the stock markets. What triggered the burst of this bubble was a massive multi-billion dollar simultaneous sell order from leading technology companies such as Dell, Cisco and IBM. Though it is said that this initial sell-off was just a coincidence, but it was too strong for investors at the NASDAQ to handle. Between March 2000 and October 2002, the Internet and technology companies shed a whopping $5 trillion in market value!

Different analysts have their own reasons as to what led to the crash-landing. Some say that it was a result of the ‘irrational crowd behavior’ that led people to believe that there was substantial value to be made in this field of business. Others however feel that this was a result of lack of information about this new domain, and their inability to ascertain the asset value, which drove rational people to commit this mistake. According to Rob Enderle, Technology Analyst, “The Dot com bubble burst, because it was feeding frenzy on Internet stocks and investments without any adequate financial controls or acceptable business practices. Folks acted like they were going to be measured on how much money they could spend in the shortest period of time.” Another opinion points out that the business model that these Internet companies followed at that time was flawed. 


Source : IIPM Editorial, 2012.
An Initiative of IIPM, Malay Chaudhuri

For More IIPM Info, Visit below mentioned IIPM articles.


Posted by at
Labels: , , , , , , , , , , , , , ,

Monday, September 10, 2012

MOBILE MANUFACTURING: CRITICAL MASS

Mobile handset production in India has seriously lagged the Telecom Services Revolution. Current trends provide an opportunity to rectify this anomaly. Can India take it up when it matters? 

They are likely to follow the trail of the MNC giants before them and get into full fledged manufacturing. Sure enough, Micromax is expected to invest half of the money raised through its upcoming IPO to set up manufacturing in Chennai. Other players like Videocon, Lava, Wyncomm and Karbonn are planning to start manufacturing operations, while Spice has commenced trial production. In fact, even Chinese players like ZTE and Huawei feel that the 5-10% of benefit on shipping from China is attractive enough to set up operations here. “With most local companies including ourselves seriously considering manufacturing in India, the country seems to be emerging not only as the second biggest EMS location but also a mobile manufacturing hub,” says Arvind Vohra, Co-Founder & MD, Wynn Telecom Ltd.

There are major reasons for visualising India as a global manufacturing hub or production factory. Firstly, the cost effectiveness of manufacturing in India. Ganesh Ramamoorthy, Analyst, Gartner, states, “The opportunity is very high to set up manufacturing base in india. Two factors are involved for decision (to manufacture) – volume targetted by companies and business model used.” Mobile connections in India will grow by 27.3% in 2010 to reach above 660 million with revenue of $19.8 billion to be generated (mobile services). Along with this, mobile penetration for 2010 is projected at 55.9%, which is expected to reach 82% by 2014. Mobile production revenue in India is expected to grow from $10.14 billion to $28 billion at a CAGR of 18.1% (Gartner). According to Pankaj Mohindroo, President, ICA, “Around 135 million phones were manufactured in India last year, which is 11% of total global manufacturing. Out of this number, around 70 million were exported.” The plan is to take the share to 20%. There are people who contest these figures, saying that manufacturing in India is actually more of assembling.

S. N. Rai, Co-founder & Director, Lava International Ltd. admits, “In the long-run China will not be too competitive as compared to India. In order to get the ball rolling for manufacturing in India the players need to achieve a ‘Critical Mass Production and Market Base’ which will make manufacturing here profitable.” Now it’s up to the government to seize the opportunity and ensure that the local handset industry gets the required force and capability to meet the demands in future. One of the key demands of the industry is to be provided STPI as was done for the IT industry. For a manufacturing sector to grow, the most vital aspect is the ecosystem and supply chain, where China has a huge advantage. Presently, very little component sourcing is happening in India. Only electrical and mechanical parts are made here whereas electronic components are all imported. Just as handset manufacturers are showing interest, the government needs to attract component vendors to set up production here, which will help keep the handsets competitive. A thrust at this critical time can do wonders for mobile handset manufacturing in India. It is a bus we can ill afford to miss.


Source : IIPM Editorial, 2012.
For More IIPM Info, Visit below mentioned IIPM articles.
 
IIPM : The B-School with a Human Face
Posted by at
Labels: , , , , , , , , , , , ,
Subscribe to: Posts (Atom)