IBM on solid ground

IBM, the world’s largest technology services company, reported fourth-quarter earnings and revenue that beat estimates on the back of growth in emerging markets.

It gave a better-than-expected 2013 outlook after a solid fourth quarter that analysts say has more to do with Big Blue's smooth execution than a vibrant tech spending environment.

Companies had been widely expected to hold back on IT purchases in December in part because of worries about the so-called US fiscal cliff.

Automatic tax increases and spending cuts would have been triggered had Congress not made a deal to avert the cliff and could have pushed the weak US economy into recession.

But IBM said on Tuesday that its quarterly results beat forecasts and it planned to achieve earnings of at least US$16.70 a share for the full year, above analysts' consensus forecast of US$16.57.
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While some analysts said IBM's earnings might be a sign of an improved tech spending environment, others said the strong results were specific to IBM's business model.

“IBM is better positioned in a tough environment than most tech companies are,” said Cindy Shaw, managing director at Discern.

IBM made a bold strategic move a decade ago when it bought PriceWaterhouse's consulting business and then decided to exit the PC business, betting its future was in finding solutions to business problems with the help of software and technology.

That strategy appears to have paid off.

“What IBM does better than anyone, with the exception of Accenture, is solving problems and I am not talking about taking out some costs, but really driving revenue,” Shaw said.

In addition, she said, IBM was strong in “hot growth markets” such as data analytics, cloud computing, emerging markets and what IBM calls smarter planet, which aims to improve areas such as traffic, power grids and food production.

Sterne Agee analyst Shaw Wu agreed, saying the success appeared to be more specific to IBM than the industry in general.

“The results show that the IBM advantage and business model vertical integration of hardware and software is difficult to replicate,” he said.

“IBM has been doing this the longest and customers are very accustomed to it. They have a much stronger offering and brand name.”

As a result quarterly net income rose 10% to US$6.1bil, or US$5.39 a share from US$4.71 a year earlier. Revenue dropped 1% to US$29.3bil due to the sale of its retail business in the third quarter.

Analysts had expected the Armonk, New York-based company to report net income of US$5.95bil, or US$5.25 a share, on revenue of US$29.05bil, according to Thomson Reuters I/B/E/S.

Revenue grew in particular because of an 11% increase in IBM's growth markets in Brazil, India, Russia and China.

Software revenue was up 3% in the quarter. Reuters

Some analysts said IBM's better than expected results were a sign that tech spending might not have been as bleak as expected.

”It is better than what people had feared,” said Brian Marshall, an analyst at ISI Group.

”Virtually every segment did a little bit better than people expected. It supports the fact that things are getting better out there at least from a tech industry standpoint.”

Andrew Bartels, an analyst with research firm Forrester Research, said: “We were expecting a lot of companies were sitting on their wallets until it became clear what was going to become of the fiscal cliff.

”Given the fact it's Q4 with a cloud of the fiscal cliff, it's a positive indication that tech software will be doing better in the next couple of months.”

IBM shares rose more than 4 percent to $204.50 after closing at $196.08 on the New York Stock Exchange.- Reuters  

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Is there ethics in politics?

DR Mohd Farid Mohd Shahran of Ikim in “When the world of politics is devoid of ethics” (The Star Jan 22 - See the attachment) believes there is still room for ethics in politics.

In the real world, especially in developing countries, the ethics of Plato and al-Farabi are only good for an utopian society.

While man is not born power crazy, those who enter politics are goaded by power to resort to unethical means.

Morality is hard to preserve and practise in politics.

English philosopher Francis Bacon said: “It is hard and severe a thing to be a true politician as to be truly moral.”

Unethical behaviour seems to be the order of the day as the general election looms near.

Almost everyday we read of mudslinging on both sides of the fence. Everything under the sun is being politicised as the stakes are very high.

French philosopher Voltaire remarked: “The pleasure of governing must certainly be exquisite if we may judge from the vast numbers who are eager to be concerned with it.”

Had Voltaire been alive today, he would qualify his statement by saying, “It is not so much the pleasure of governing, but the power that comes with it, making the vast numbers who are eager to be concerned with it.”

As Dr Farid said: “Politics, in its true meaning, is praiseworthy”. But the “realpolitik” meaning is different. Mao Zedong once said: “Power comes from the barrel of the gun”.

Jonathan Swift said: “Politics as the word is understood, is nothing but corruption.”

Despite the negative connotation of politics in its general form, politics as a profession can have high ethical values if the very system in which politics arise have strong values as seen in most developed countries.

Singapore is a shining example where the ruling party has great difficulty finding candidates to stand for elections as the people do not see it as a way to become rich overnight.

Singaporean politicians are known to observe and practice the highest ethical principles as espoused by Plato.

The observance of ethical political principles in Malaysia still has a long way to go as noted by Dr Farid where “small issues can potentially be magnified into a big scandal.”

“The various issues raised by political parties range from major ones such as fair economic distribution and political justice, to the most trivial or personal matters such as the way leaders and their family members dress”.

So far, general elections in Malaysia, unlike in some developing countries, have not resulted in the use of heavy weapons to gun down people.

And when the election results are announced, people accept it in good faith and continue with their daily chores while waiting for the next general election. Meanwhile, they hope the party that won will honour its manifesto.

One of America’s founding father’s Thomas Jefferson said: “I have no ambition to govern men. It is a painful and thankless office.” Thomas Jefferson was a man of high ethical values.

Do we have men like Jefferson in Malaysian politics?

Certainly there are many men and they should be given the task of providing true leadership along the political principles of Plato and al-Farabi.

By HASSAN TALIB

When the world of politics is devoid of ethics

 

Much too often, personalities are the biggest casualties as they are ruthlessly tarnished. All the dirt and grime is dug out and paraded for the nation to see despite their many prior good contributions.

WITH the general election around the corner, the heat of the Malaysian political climate is gradually increasing.

The number of political gatherings, ceramah and demonstrations by political parties multiply by the day and continue to increase.

The various issues raised by political parties range from major ones such as fair economic distribution and political justice, to the most trivial or personal matters such as the way leaders and their family members dress.

It looks as if Malaysians have become a very conscious lot concerned over everything overnight. Small issues can potentially be magnified into a big scandal.

Not only is the intensity palpable within ceramah and gatherings, a similar tone is also evident in cyberspace where heated debates and exchange of views have overwhelmed the social media such as blogs, Facebook and Twitter.

While such a phenomenon is regarded as normal, the negative culture attached to it is best eschewed.

To render support for one’s own party, some leaders and fanatical followers would resort to unethical means such as making false claims and unfounded allegations that include character assassination.

In response to such accusations, the opposing parties will stage similar counter attacks. As a result, emotions simply overrule reason causing the situation to get out of hand.

Understandably, the principle that guides extreme political groups is that politics is a war in which all kinds of weapons must be deployed to exterminate the enemies.

In engaging power politics, the prince, says Machiavelli, must be “adaptable and know how to do wrong when he must”.

Naturally, such an approach will have a more divisive impact on society.

People become more divided and emotions override everything else, particularly level-headedness.

Much too often, personalities are the biggest casualties as they are ruthlessly tarnished. All the dirt and grime is dug out and paraded for the nation to see despite their many prior good contributions.

Thus, questions remain: Is this the way politics serve its purpose in administering human life? Must society undergo this unhealthy process to elect a leader? Must we necessarily be divisive before arriving at political maturity when the amount of damage done is irreparable?

The answer lies in how the meaning of politics should be properly understood.

More importantly is the understanding of the role of ethics in political activities.

Politics, in its true meaning, is praiseworthy.

Philosophers and political thinkers as early as Plato, through his idea of the “Philosopher King”, had proposed a political system where wisdom and virtues must be the bases of governing states.

Although his idea is also criticised as utopian, the principle that Plato tried to put forward is very important, that is, a true political system must be guided by knowledge and virtue reflected primarily in the character of the leaders and politicians.

In other words, ethics, according to Plato, must be the basis of politics.

Just as men must live virtuous and good lives, a state must also be built on strong ethical ground. If the state is unfavourable, says Plato, the individual citizens would find themselves unable to lead a good life as it should be lived.

This organic relationship between ethics and politics from Plato stemmed from his idea that a state must be a microcosmic reflection of man. Since a state is run by humans who need to be furnished with good ethical virtues for him to be good, a good state must also be refined with virtuous characteristics.

Echoing Plato is al-Farabi, a celebrated thinker from the Muslim tradition whose work, The Opinions of Inhabitants of the Virtuous City, underlines that a state should be properly ruled by virtuous leaders and followed by virtuous people.

“The excellent city resembles the perfect and healthy body where all of whose limbs co-operate to make the life of the animal perfect and to preserve it in this state.”

Among the qualities needed by a ruler, according to al-Farabi, are intelligence, good memory, keenness of mind, love of knowledge, moderation in matters of food, drink and sex, love of truthfulness, magnanimity, frugality, love of justice, firmness and courage.

Arguably for some, real politics can never take ethics as its principle.

Such a view is justified if only man is naturally born with the attribute of being power crazed.

However, this has not been so since man was created by God in the best of mould as affirmed in the Quran: “Verily we have created the human being in the best of form.”

Furthermore, mankind can take pride in some of its leaders and rulers with good qualities and virtuous characteristics decorating its history. In Islam, for example, Prophet Muhammad and the four-guided caliphs continue to be revered as leaders par excellence for all Muslims. Another outstanding and exemplary leader at a later period was Umar Abd Aziz whose short rule, nevertheless, left a tremendous impact.

So rigid was Umar’s standard of ethics that he was said to have even refused to use up the candle in his office to light the room when discussing personal matters.

In sum, while we all can agree and understand Einstein when he said, “Politics is more difficult than physics”, we hope that, just as physics has contributed immensely to benefit the life of the human kind, politics would be able to do likewise.

BY DR MOHD FARID MOHD SHAHRAN, SENIOR FELLOW CENTRE OF ECONOMICS AND SOCIAL SCIENCE 
IKIM VIEWS - The Star Jan 22, 2012

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On Ethics and Politics :
 Is man not capable of love if he embraced the morality of self-interest? Only the man who loves himself and who knows his values is capable of loving others, albeit not indiscriminately.

Chance to invest in distressed assets

Distressed property markets where deals are difficult to finance and yield spreads are at all-time highs provide attractive investment opportunities, according to Morgan Stanley’s real estate unit.

In the Asia-Pacific region, Morgan Stanley Real Estate Investing is most focused on China, India, Australia and Japan, said Olivier de Poulpiquet, who helps oversee $36 billion in real estate assets as the global co-head for the unit.

In India and China, demand is driven by strong demographic trends amid a dearth of financing, while in Australia and Japan, low borrowing costs are providing opportunities, he said.

Morgan Stanley, with a team of 280 globally in 11 countries dedicated to the property business, has about 45 percent of its investments in the U.S., 33 percent in Asia and about 22 percent in Europe.

In many developed markets, such as U.S., Japan and Australia, the yield spread between real estate and the risk free rate, typically the interest rate on U.S. Treasury bills, is as much as 400 basis points, de Poulpiquet said.

“Asia and the U.S. will continue to offer opportunities,” de Poulpiquet said in an interview in Singapore yesterday. “Investments in real estate have seen a flight to safety globally and in particular in the U.S. and Europe.”

Interest in property investments by institutional investors is improving as the asset class is viewed as an effective portfolio diversifier and an inflation hedge, de Poulpiquet said. Allocations to real estate by major institutions may climb from an average of 7 percent currently to 10 percent, he said, without providing a time frame for the increase.

India, China

In India and China, Morgan Stanley is finding opportunities by financing developers that are seeking money to complete projects amid a scarcity of capital, de Poulpiquet said.

In its almost three-year effort to tighten the property market, the Chinese government has raised down-payment and mortgage requirements, imposed a property tax for the first time in Shanghai and Chongqing, and enacted home-purchase restrictions in about 40 cities. India’s biggest developers have struggled to rein in record debt as they grapple with high borrowing costs, dwindling sales and banks’ reluctance to lend.

“The major trend in these markets is that this growth is combined with a capital constrained environment for real estate, mostly driven by government interventions and price cooling measures,” de Poulpiquet said.

“In India and China, there is less opportunity to buy existing assets but greater opportunity to pick the right developer and build to either lease or sell.”

Favorable Demographics

India will have 127 million more working age adults by 2020, while in China, the 470 million adults leaving rural areas for cities will reach a rate of 11 million per year, said de Poulpiquet.

Over the next 15 years, the total global urban space growth will reach about 82,000 square kilometers (31,660 square miles), 47 percent of which will be driven by India and China, he said.

In markets such as Shanghai, the supply of class A office spaces is relatively low while demand is forecasted to remain robust, de Poulpiquet said. In India, the trend is similar where the residential sector continues to offer interesting opportunities, he said.

In Australia, distressed assets sold by European banks which are undergoing deleveraging processes to clean up their balance sheets are attractive, said de Poulpiquet.

In Japan, Morgan Stanley is buying class B office assets in Tokyo and greater Tokyo, he said.

“In many markets globally, including Japan and Australia you can buy class B plus assets, at significant yield differential between your cost of borrowing and the real estate yield,” said de Poulpiquet. “It is a relatively safer investment with good quality yield and return profile.”

Europe will also increasingly offer attractive investments in real estate with all the level of distress in the market, he said. Still, Morgan Stanley remains “cautious” and focused on making “defensive investments” in the region as prices still have some room to fall, he said.

“Overall, we will see slower growth, more volatility but in Europe, it’s neither a doomsday scenario nor in a happy recovery and this will last for a while,” he said.- Bloomberg

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Japan's strategic offensive, from Diaoyu Islands to Nay Pyi Taw

Illustration: Liu Rui

Shinzo Abe's election has pushed the Diaoyu Islands crisis into the edge of all-out confrontation between China and Japan.

 While Japan's high-profile move on the Diaoyu Islands is a direct confrontation against its neighbor, its actions in Myanmar are a secret detour against China.

As the Diaoyu Islands dispute gripped the attention of China and the whole world, Japan's newly appointed Finance Minister Taro Aso visited Myanmar to write off its debt of 500 billion yen ($5.58 billion), followed by major financial groups covertly pushing into Myanmar's economic field.

In fields where China is also involved, Japanese financial groups, with their advanced technology, strong capital and national support, are in a race with Chinese enterprises.

They do not aim for profits at the moment, and some would rather suffer a loss.

This is not a healthy competition, but a vicious economic war which aims to drive out Chinese companies, control Myanmar's economy, and finally, cut off China's energy passageway to the Indian Ocean.

Soon after the US focused on hedging against China in Myanmar, Japan immediately started annihilating Chinese enterprises under the umbrella of the US' strategy.

China has three grand strategic projects in Myanmar - the Myitsone hydropower project, which has been forced into a total shutdown, the Monywa-Latpadantaung copper mine, where several public protests have taken place, and finally, the construction of an oil and gas pipeline between China and Myanmar, where recent signs have become increasingly disturbing.

Myanmar joins sea and land in the US' C-shaped encirclement of China, which includes the Pacific Ocean, the Indian Ocean, East Asia and South Asia.

After the US decided on an eastward strategic shift centered on encircling China, an East Asian alliance, with Japan, the Philippines and Vietnam as the axis, promptly came into being and endangered vast areas in the East China Sea and the South China Sea.

It is a fatal threat to China, which relies heavily on the sea for its trade and energy. Under such circumstances, Myanmar's vital strategic position is evident, which is why the US and Japan have concentrated on the country.

Due to the strong US-Japan alliance, it is very difficult for China to achieve a decisive breakthrough in the East China Sea and the South China Sea issues, while a westward focus may be the best solution.

However, Myanmar, one of the four westward passages, was seized initially by the US and Japan, which have launched a strategic offensive in what seems like a showdown posture.

Through the powerful intervention of the US and Japan, great changes have taken place in Myanmar's political situation, and Myanmese military forces' large-scale attack on the Kachin Independence Army is only one event that shows this. 

Thus, Myanmar has become the arena where China, the US and Japan play out a strategic game. We hope China can develop a proper strategy to deal with the situation in the new century.

After the US' public announcement of its eastward strategic shift, some Chinese have given up their fantasies about the US.

 A number of Chinese have another fantasy of China uniting with Japan to isolate the US, as Japan's national strategy aims to keep abreast with China and the US in its politics.

But the US' usefulness is much greater than China's, and will be for quite some time. Japan will align with the US strategic direction in this period, rather than move closer to China.

I suggest strategy planning departments deploy unified strategic actions with regards to Myanmar and the Diaoyu Islands from the perspective of the overall Sino-Japanese duel.

On the issue of Myanmar, China should support the normal economic activities of Chinese enterprises with State power, as Japan has done. As for the Diaoyu Islands, China must leave Japan in a defensive position by regaining the initiative instantly.

By Dai Xu
The author is director of China Institute for Marine Security and Cooperation Studies. opinion@globaltimes.com.cn

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Right person for the right job, how and what to do?

MEASURE twice, cut once is a term often used by carpenters and tailors when measuring material for a specific purpose. The point is to be very careful and judicious when measuring to avoid nasty outcomes once the wood or material has been cut.

However, this phrase is just as appropriate for the hiring process as well. Once an employee is hired, the company has to ensure that the individual assimilates well into the organisation and achieves the desired level of performance; otherwise the remedial action that needs to be taken can be very tedious and even unpleasant.

One of the many pitfalls of this situation is that employers, under the pressure of filling a vacancy, could end up hiring individuals who may not be the best fit, and as a result, could be setting a whole series of messy events into motion.

Not too long ago, one of my clients approached us to take on a sales director search. The client shared that he had been a bit too hasty in hiring the last sales director, and had failed to dive deep into the strategic value and scope of the role before making the hiring decision.

In our post mortem discussion with the client, it was clear that he had hired an individual who might have been suitable for a sales manager's position; one level below the sales director's position, but had given him the sales director role because of urgency and the lack of suitable candidates at that time.

The unfortunate result of that scenario was that the newly-hired sales director resigned after only three weeks on the job under the pressure and scope of the work, leaving a path of chaos amongst all the company's clients and suppliers. As such, half-way into its financial year, the company was forced to start looking for another candidate for the sales director role.

In this instance, the company may have benefitted from measuring twice and cutting only once, rather than having to repeat the process of hiring for the same position after such a short period of time.

Other than experience, another critical-but-often-overlooked consideration in the recruitment process is the salary range or the package offered for the role. Salaries and wages are always moving in tandem with the demand of a particular skill-set or type of profile. The more in demand a particular type of skill is, the higher the cost of acquiring that skill.

Some organisations are willing to pay above market rates for certain key positions, as the alternative of not having someone in the role may actually cost the organisation more, from a commercial standpoint. On the other hand, there are some companies which would rather keep within a certain salary band rather than pay the market rate to an individual with the right amount of experience for the job.

From my experience, it is essential to have not only a good understanding of the market salaries but also what the candidate's realistic expectation is.

If we pay too high above the market rate, this often sets a very high expectation for this person to perform. And in some instances, if the individual is unable to deliver the expected results, the risk of paying an inflated price to acquire this individual might not have paid off; and if the company had hired someone less qualified because that was all its budget could afford, then the less-experienced individual may also not be able to deliver on the expectation, as he or she may not have the knowledge, capability or necessary life-experience to do so.

Finding a solution

How can we put the measure twice cut once concept into practice?

One innovative human resource director shared with me recently that he had been trying unsuccessfully to fill a role in his department for quite some time. During this period, he was introduced to an individual who was not an ideal fit to the role in terms of experience but one who was teachable and would be able to work well with the rest of the team.

So, he crafted a role around the individual's profile and experience and got the revised role approved by the top management. This worked out well for both the company and the individual, as the expectations set were achievable and realistic. The human resource director, in this case, had to measure twice but only had to cut once as he managed to find a solution to his problem. The solution turned out to be a good one, as the individual successfully completed her probation period and met her key performance indicators.

Another client who was looking for a managing director for his company was also forced to take a less conventional route to filling his needs. The client shared with me that he had already interviewed more than 20 candidates for this role before approaching us to assist with this search. The only candidate who was given an offer turned down the job when he was counter-offered by his current employer.

As such, the client already knew the market and we were hard-pressed to come up with a new slate of candidates for the search. The client liked one of our candidates but felt he wasn't ready to take on the role of managing director yet. However, instead of disregarding a good talent, the client decided to hire the individual as an operations director.

As such, the individual was able to grow into the managing director's role and the company would also have the benefit of securing a good talent who could potentially achieve more for the company in the future.

In this example, our client knew exactly what he needed for the role and exercised some flexibility to acquire good talent rather than missing out on a high-potential candidate. In addition, he did not compromise on his requirements but was able to see beyond the immediate need to find a managing director.

Different approach

When to measure and when to cut? An important aspect of measure twice cut once, is that the person doing the measuring needs to take the time to get it right and not be in too much of a hurry to get to the cutting stage. A carpenter or tailor is a craftsman who takes pride in his work. Therefore, when we hire, it is essential to look carefully at all aspects of the role which needs to be filled and take the time to understand how a potential candidate will fit that role.

The technical expertise or hard skills are only one part of the whole equation. We should take the time to understand the personality profile of the individual, his or her motivations and long-term goals.

Most hiring managers often forget to look at options in the recruitment process. There is a finite pool of talent and the best talents would also have been earmarked by your competitors as well.

So, instead of doing the same thing and expecting a different outcome, perhaps it's worth the effort to try a different approach. Tailor the job to fit a good talent, or give the person another role to allow time for the individual to grow into the intended position. Although we may not always have the option of changing the status quo in this way, the purpose of this article is to offer another alternative solution to the talent shortage problem, and hopefully, bring about a better outcome.

Talking HR with Pauline Ng

Pauline Ng, consulting director and head of BTI Consultants, encourages every hiring manager to explore all options and leave no stone unturned when making the decision to hire by utilising assessment tools and having a comprehensive map of the talent market.