Whomever wins the bidding for T-Mobile US, one outcome seems certain: The wireless carrier’s headquarters in Bellevue will be lost. France’s Iliad said today it would offer $15 billion in cash for a 56.6 share of T-Mobile. This will compete against Sprint, which has been honing a complete acquisition of the company for several months…More
Puget Sound companies put in a respectable showing in the 13th annual Best Global Brands report from Interbrand, a consulting outfit owned by the Omnicom Group. It ranks brands the top 100 brands based on “ongoing investment and management of the brand as a business asset.” Among the criteria: Brand strength (“the ability of the brand to secure the delivery of expected future earnings”); financial performance and the role of brand (“the portion of the decision to purchase that is attributable to brand–this is exclusive of other aspects of the offer like price or feature”).
Microsoft is No. 5 out of 100, followed by Amazon.com at No. 20, and Starbucks at 88. Oregon’s Nike placed at 26. The top spot went to Coca-Cola, followed by Apple.
Amazon was the second biggest brand riser, up from 36 in 2010 and 26 in 2011. The survey comments, “…Amazon has much to celebrate. However, its unfriendly stance toward unions, hardball battles to evade sales taxes in certain parts of the U.S., and a highly publicized story about the harsh treatment of workers in a Pennsylvania warehouse last year have put a dent in the company’s image. To leverage the full potential of its brand, Amazon needs to manage the reputation of its business and work to improve employee relations.”More
Thirty years of lax antitrust enforcement and favorable tax treatment and big compensation for executives involved in mergers have left us with many highly concentrated industries. The results: Fewer jobs, less competition, too much political clout for the big quasi-monopolies and cartels, and arguably less innovation. When AT&T laid down $39 billion to acquire Bellevue-based T-Mobile, it seemed as if the same old game would continue. AT&T would control 53 percent of the market. Then, shockingly for an administration so controlled by business (for all the “socialism” rants on the right), the Obama Justice Department sued to stop the deal.
Now, according to the Wall Street Journal, AT&T’s efforts to sell off enough assert to save the acquisition are failing and it’s close to giving up. This is a good thing, even if T-Mobile’s owner, Deutsche Telekom, wants out of the American cellular market. Let another potential partner or owner emerge.
For most of the year or even longer, executives at both companies have been more focused on doing the deal than serving customers. This has been happening in American business for decades. It’s easier to buy growth through a merger than to grow organically. Yet study after study shows that most big mergers fail to deliver their promised benefits. Meanwhile, the mania to do deals to please Wall Street distorts the economy in myriad ways.More
Signed, sealed, delivered — it’s yours. The first Dreamliner took off from Everett this morning to begin service for ANA in Japan. It’s a milestone for the Puget Sound. A “finally” for Boeing. And a time to check out some other things to watch as the last quarter of the year unfolds in Seattle:
1. The 737. Although 787 work will keep aerospace employment in the region strong for the next few years, Boeing is under heavy pressure in the narrow-body market. With plans for a 737 replacement shelved, at least for now, in favor of upgrading the venerable 737, the competition is on for where it will be built. Washington state can’t take anything for granted, even if Boeing can count on proven efficiencies and an existing plant in Renton. The next few months should give an idea of how the state and regional strategy is shaping up, or not. Meanwhile, the case before the NLRB over Boeing setting up a factory in North Charleston will play out, with much political strum und drang.
2. The holidays. Traditionally, this is the time for retailers to make most of their money and add jobs. Both seem at risk as consumer confidence is shaky and the unemployment crisis drags on. If things don’t improve in this quarter, expect more declines in tax revenue, which will result in more of a drag on the economy as the public sector continues to contract. Small businesses on the edge may be done for (even some big chains have cut back, e.g. the Rochester Big and Tall store closing in downtown Seattle). On the other hand, strong retailers such as Nordstrom, Costco and Amazon.com will likely profit from their existing market positions. This is a two-track economy and the “haves” will still shop with abandon. The likelihood of retailers adding large numbers of seasonal workers seems dim.More
AT&T’s $39 billion cash-and-stock bid for T-Mobile USA is a huge loss for the Seattle area. It will mean the elimination of an important corporate headquarters, as well as the end of thousands of well-paying jobs. The ones lost will be the high-end talent magnets. Also lost: The capital, prestige and power a headquarters brings,
The unhealthy incentives for mergers resulting in further anti-competitive industry consolidation is a bad thing for the American economy, not just the hundreds of cities that have seen their local economies devastated. It means more concentration, less innovation and competition. Managements spend too much of their time dealing with mergers, whether doing them or fending off the Wall Street bankers and lawyers that earn huge fees by peddling these deals. But as long as favorable tax treatment and no antitrust enforcement continues, they will be part of the landscape. The reality is that Seattle is growing fewer companies to last than it is losing them, and we’re better off than most places. It’s a huge challenge for economic-development leaders.
As for the deal: AT&T gets to grow through an acquisition, rather than organically by actually serving customers well (how’s that iPhone network working out for you). AT&T shares have been trailing the S&P 500 since the carrier lost its exclusive deal with Apple. The number of national wireless carriers will shrink from four to three.More
So much for the complaints I received from T-Mobile after I wrote a blog post last October saying it was ripe for a merger. As the Seattle Times’ Brier Dudley reports, the Bellevue-based company’s parent, Deutsche Telekom is in talks to merge it with Sprint.
The stakes for the regional economy are the future of T-Mobile’s headquarters and its 3,000 employees. Mergers always result in the loss of one headquarters and most of its jobs: This is one way the deal “pays for itself.” T-Mobile is one of the critical providers of high-paid jobs found among the Puget Sound’s headquarters companies. Sprint is headquartered in suburban Kansas City.More