EDITORIAL: Drawn and quartered
- 18 October, 2000 12:37
Being the Australian regional head of a US-listed company would currently have to be one of the highest stress positions on offer, a situation which may help to explain the rash of recent departures from such roles. This pressure to perform for US bean counters, analysts and investors would have to be particularly intense if the company concerned has a focus on hardware or software that is accelerating towards commodity status.
Just last week, several prominent names in the channel resigned from positions they had held as heads of local subsidiaries of prominent listed US companies.
Firstly, Ingram Micro's Michael Shea decided that, due to other interests, he could not commit as much time as was necessary to maintain and grow the global distribution giant's fledgling local operation (see page 12). Shea had steered the ship through some rough waters and while he was not available for comment, he must have been faced with particular difficulties in keeping up Ingram's revenues as our dollar struggles for breath against the greenback.
Hot on the heels of Shea leaving the IT channel, former Intel sales manager Archie Wilson also moved on, just 16 months after taking on the job as 3Com's Australian big cheese.
Meanwhile, Compaq Australia's Ian Penman vacated his throne last week, having stated in August (when he announced his retirement) that the challenge of meeting quarterly demands would not be missed.
With Wall Street as their masters, there is simply no room for results that don't match the targets set forth in annual reports. To maintain the interest of investors, revenue and market share growth is essential and by having to report on a quarterly basis, the pressure is on four times a year.
Recent exchange-rate volatility must be playing havoc with both pricing of products and the ability of subsidiaries to keep up with the quarterly revenue demands of foreign bean counters who are measuring performance in increasingly expensive US dollars.
Under such a scenario, fundamental economic forces mean there is less demand as a result of rising prices as Australian currency loses its value. Additionally Aussie drachmas accumulated by local subsidiaries represent less in "real" US dollars to the unforgiving auditors and analysts States-side. The only good side to exchange rate falls for US companies is that it is now less expensive for them to invest Downunder.
Most of the big players will be attempting to manage the volatile currency situation with hedge funds, but as the Aussie dollar has plummeted to unexplored new depths against its US counterpart, the whole channel is in uncharted waters.
Unfortunately, the situation could get worse before it gets better. When asked to comment on the challenges faced by 3Com in the next 12 months, Wilson told me the exchange rate represented the biggest single obstacle to sustained success for the network hardware vendor.
Meanwhile, as the recently appointed editor of Australian Reseller News, I am keen to hear from readers. Any comments you might want to profer in relation to stories we dish up or issues you face in the day-to-day running of your business would be more than welcome.