Maplin administration

[Robin2]

so decided (without checking) to liquidise most of the stock to free up funds for other purchaes.

 

 

If one manger can do that without another manager being aware in sufficient time to have an input into the decision the company has bigger management problems.

 

...R

[Bucoops]

If one manger can do that without another manager being aware in sufficient time to have an input into the decision the company has bigger management problems.

 

...R

 

And that was just one incident. They were fortunate to produce something that no one else did and was in demand. To give a clue as to the scruples, that design was "borrowed" from another company who hadn't registered it properly, then they sued the original people. I didn't stay long!

[Oldddudders]

If one manger can do that without another manager being aware in sufficient time to have an input into the decision the company has bigger management problems.

 

...R

I think we live in times where the FD is God. This is because firms no longer seek long-term sustainable growth, but short term dividends, and liquidating assets does wonders for this year’s balance sheet.

[JSpencer]

I think we live in times where the FD is God. This is because firms no longer seek long-term sustainable growth, but short term dividends, and liquidating assets does wonders for this year’s balance sheet.

 

Assets figure on a balance sheet, so liquidating them early will only appear as a smaller figure on the same balance sheet.

 

The only reason to liquidate assets is if you need cash - because as soon as your have none, your out of business.

 

If the company can afford to sit on high margin assets for a long time (Hattons buying all remaining Dublo stock cheap and slowly seeing them off at higher prices for a decade or so after), then they stand to make a lot of money (providing storage is not an issue or cost).

[railroadbill]

Tandy didn't go bust they were sitting on a nice property portfolio which was more attractive than the business itself.

Carphone Warehouse bought the shops just to get the retail sites. Some Tandy stores were just as big as Maplins and generally in the same sort of retail areas.

I used to like the special offers and bargain bins which had some very cheap offers.

Maplin however started getting larger stores such as the one in Carlilse which was huge but only ever had enough stock to fill half the floor area, so it was spread rather thinly.

 

Tandy today:

https://www.tandyonline.com/

Check the prices. They make Maplin look really expensive

 

Tandy as some may know was originally the UK arm of Radio Shack, which name was already taken in the UK (an electronics store in London) so the name Tandy was used instead.

 

History here:

https://en.wikipedia.org/wiki/Tandy_Corporation

Keith

Tandy history was interesting, I'd forgotten that they made early laptop pcs.  The current on-line web site looks useful, (and cheap) thanks for that.

[StevieD71]

Do you have at least 50 of each type and resistance value?

 

...R

Probably. There are drawers full of the bloody things!

[melmerby]

I think we live in times where the FD is God.

Nah. He's more important than that

(paraphrasing good old Bill Shankly)

 

Keith

[Robin2]

Probably. There are drawers full of the bloody things!

That seems to explain why there weren't enough in the branch I visited  

 

...R

Edited March 19, 2018 by Robin2

[rockershovel]

I think we live in times where the FD is God. This is because firms no longer seek long-term sustainable growth, but short term dividends, and liquidating assets does wonders for this year’s balance sheet.

Assets pay no dividends. The whole point about corporate raiding as a business model, is to squeeze the maximum value out of a company which you haven’t actually paid for, in the minimum time. This is done by selling all assets and loading the company with unsustainable debt, so that the hostile takeover company recovers any money it has actually ventured, very quickly. Hence the suicidal borrowing regimes often imposed, because once the assets are gone, the ability to use them as collateral goes with them.

 

This was my point about the differences between English, Dutch and German corporate law. The Germans and Dutch necessarily rebuilt their completely ruined economies after 1945, having no option. The Germans in particular, were subject to the absolute necessity to pay their way by producing things. Hence their legal and financial structure is designed to do exactly that.

 

This doesn’t mean the Germans DON’T have a predatory banking sector; it’s just that they don’t allow it to run amok in the backyard.

[Robin2]

The whole point about corporate raiding as a business model,d.

It's essential to keep in mind that corporate raiding can only work if the shareholders are prepared to sell their shares.

 

To my mind that is the root of the problem. Most of the people holding the shares have no particular knowledge of, or interest in the business of the company. They just bought the shares in the hope that they could sell them at a higher price to a greater fool.

 

If people who buy shares are obliged to hold them for a longish period (maybe 12 or 24 months) and if they sell them they are precluded from buying them back for a similar period everyone would take a much greater interest in the underlying health of the business.

 

Of course the stockbrokers would complain bitterly about interference in the free market because their commissions would fall.

 

...R

[APOLLO]

Called into Maplin Wigan this morning. Lots of stock there at varying discounts, and there are placards to tell you what the discounts are (individual items not repriced, look at the placards for the discount applied at the till). Some are 50%, some 30% etc etc. I got a few odds and ends, shrink wrap, solder (last one) and a can of switch cleaner. Staff said the shop has a few weeks / until stock has gone - no date known. I felt sorry for them.

 

As to corporate raiding have a look at this site. Railway (road) related and a bit controversial,

 

http://fortune.com/2017/08/24/csx-hunter-harrison-trains/

 

This will tell you the ongoing story from the employee's perspective (strongly !!).

 

http://www.csx-sucks.com/

 

Sad world for a lot of good people.

 

Brit15

Edited March 19, 2018 by APOLLO

[Classsix T]

It's essential to keep in mind that corporate raiding can only work if the shareholders are prepared to sell their shares.

 

To my mind that is the root of the problem. Most of the people holding the shares have no particular knowledge of, or interest in the business of the company. They just bought the shares in the hope that they could sell them at a higher price to a greater fool.

 

If people who buy shares are obliged to hold them for a longish period (maybe 12 or 24 months) and if they sell them they are precluded from buying them back for a similar period everyone would take a much greater interest in the underlying health of the business.

 

Of course the stockbrokers would complain bitterly about interference in the free market because their commissions would fall.

 

...R

Never happen though will it? Not only for the reasons you've stated, but because it'd kill high frequency trading - a distasteful, morally questionable exchange practice in itself. If John McDonall has any sense, he'd be proposing a penny sales tax on each share sold.

 

C6T.

[Robin2]

Never happen though will it? Not only for the reasons you've stated, but because it'd kill high frequency trading - a distasteful, morally questionable exchange practice in itself. If John McDonall has any sense, he'd be proposing a penny sales tax on each share sold.

 

 

I also had high-frequency trading in my sights. How could you have any interest in a company if you hold its shares for seconds or minutes.

 

The sales tax is an interesting idea. I have a friend in the Labour Party (at a very low level). I will mention it to her.

 

...R

[JSpencer]

Assets pay no dividends.

 

 

They do in the long run with a sustainable thought out plan. The problem is, too many people go in for a Gold rush. The first few do really well having brought them cheap then selling for a much higher price to the second batch. Then these positive figures draw others in and the process repeats until the bubble bursts.

[Classsix T]

It's not a new idea Robin. I first heard it suggested on Max Kaiser's show.

I'd be surprised if John McDonall hasn't already contemplated the idea. It doesn't even have to be a penny, a fraction of 1p would earn the Treasury a tidy sum with the volume of exchanges going on.

 

C6T.

[rockershovel]

They do in the long run with a sustainable thought out plan. The problem is, too many people go in for a Gold rush. The first few do really well having brought them cheap then selling for a much higher price to the second batch. Then these positive figures draw others in and the process repeats until the bubble bursts.

That wasn’t really my point. Asset strippers buy a company, load it with debt to finance the cost of the acquisition and recover their stake, sell assets for cash to pay dividends far beyond the company’s earnings, and either sell the company on or leave it to sink or swim.

[Sheffield]

What is this sales tax? Is this the one called VAT?

[Robin2]

What is this sales tax? Is this the one called VAT?

I have no idea whether VAT is payable when you buy shares - but I suspect not. It may be payable on the stockbroker's fee.

 

To my mind the purpose of the transaction tax would be to discourage mindless short term share dealing.

 

Another of my "great" ideas is that the only person you can sell a share to, or buy a share from, should be the company that issued the shares - and the company should be under no obligation to buy or sell.

 

...R

[Clearwater]

There is already a tax on share trading - stamp duty. It’s charged at 0.5% of transaction value. It’s applied on transfer of any share whether listed on the stock exchange or not. As with any tax, push the rate too high and high you’ll find receipts fall.

 

@robin2 - not sure why you’d want to reduce liquidity in the market. Doing so will make it harder to value new issuance and make it materially harder for companies to raise money. It will impact the ability of any pension or insurance policy you have to have be able to meet any liabilities they have to you. They need liquid assets (shares, bonds etc) to be able to sell to be able to meet cash calls.

 

If, as you propose, share trading is highly limited, how do you handle a situation where you hold shares and you die? How does the estate get a fair value when it is a forced seller with no liquid market?

 

Stamp duty on shares raised c£3.3bn in 2016/17. If you restrict share trading, you’ll get rid of that income. That would be a material increase in the budget deficit.

 

David

[Clearwater]

It's not a new idea Robin. I first heard it suggested on Max Kaiser's show.

I'd be surprised if John McDonall hasn't already contemplated the idea. It doesn't even have to be a penny, a fraction of 1p would earn the Treasury a tidy sum with the volume of exchanges going on.

 

C6T.

They’ve suggested variations on the “Tobin Tax”. However where the tax proposed is greater than the buy/sell spread, you’d kill the market. Although large volumes are often traded, if, as is the case in the £/$ market where the spread is often on the third/fourth decimal place, 1p per notional £ is larger than the profit in the trade.

[Clearwater]

On asset stripping.

 

1) if I hold shares, whether publicly or privately, if someone offers me materially more than I value them at, why wouldn’t I sell? If they see value I don’t, then where is the problem.

 

2) if their business model is based on selling the constituent parts of the company, then the only way they will get banks to lend them them the money, is if the banks get repaid from the proceeds of the sale of assets. Every lending document, I’ve seen on a leveraged buy out contains exactly such provisions. Why? Because banks recognise that they will only get repaid if assets produce cash flow. Sell the asset, you use the proceeds to repay the banks.

 

3) if the business is worth more by closing it and selling the assets, that implies that the business is losing money at an operating level. Therefore, banks/owners want to dispose of the assets whilst they still have more value than the debt outstanding. They don’t always get it right but that’s why banks enforce security before all value is gone.

 

As observed on this thread and elsewhere, the high street retailers are more expensive than online sellers. Are we really surprised that a more expensive sales model results in bankruptcy? The world doesn’t stand still - there are no longer blockbuster, radio rentals and a host of other names no longer on the high street. I find it really ironic to see people lamenting the loss of businesses like Toys R Us who 30 years ago had a cheaper business model that pushed old fashioned toy shops out of business. This is just another example of the world continuing to evolve.

[Robin2]

@robin2 - not sure why you’d want to reduce liquidity in the market.

 

Because the liquidity has become an end in itself that is almost entirely divorced from considerations of how business is managed.

 

The problem is that people are making decisions because of the liquidity that they would not make without it. And if some companies can't raise capital maybe that would be a good thing. Some share issues are a thinly veiled exercise in printing money.

 

I recognize that transition from one system to another needs to be managed. But I don't believe that is impossible if people want to change.

 

I have no objection to the idea of a person owning a piece of a company and being rewarded with a dividend. I do object to a system that allows people to make profit from bits of paper - or bits in a computer database.

 

...R

Edited March 21, 2018 by Robin2

[rockershovel]

There’s a considerable problem with the relationship between assets and operating profit. I don’t argue that if the company is not earning a profit on operating its working assets, plant and buildings and the like, it is losing money at an operating level. There is also the situation that manufacturers no longer need the same locations - a high-tech company does not need coalmines and water from rivers, for example. I recently interviewed with a company which was relocating because the changes in the road network meant that it could improve its distribution costs by moving closer to DIRFT, which it used as a main outlet hub.

 

However a lot of companies, particularly older ones, own sizeable assets which have no direct relationship to the current operation, particularly land banks comprising former production sites, or land bought long ago for a fraction of its present value. Assets like this are valuable, because they serve as collateral and so, greatly facilitate borrowing without mortgaging the actual production facility, or are rented out to provide secondary income as well as financial stability. The question is, whether the management regards the ongoing survival of the company, in a viable form, as a primary goal.

 

Generally speaking, a German or Dutch manager would answer “yes” to this question, because it is what their system is designed to do, and how they see its function. Hence, for example, around 25% of British fishing rights belong to a the operators of a single Dutch trawler/factory ship, and the French control the cash flow from our electricity consumption, long after the proceeds from the sales have disappeared.

 

I’ve heard the endless contortions and sophistries of the money-shufflers. The problem seems to be that however much they convince themselves, the actual outcome seems not to work very well in the wider sense.

[Grovenor]

However where the tax proposed is greater than the buy/sell spread, you’d kill the market. Although large volumes are often traded, if, as is the case in the £/$ market where the spread is often on the third/fourth decimal place, 1p per notional £ is larger than the profit in the trade.

Surely the idea of the tax is to kill all the trading that exists purely to extract profit from such small price movements.

Regards

[Robin2]

 The question is, whether the management regards the ongoing survival of the company, in a viable form, as a primary goal.

 

Generally speaking, a German or Dutch manager would answer “yes” to this question, because it is what their system is designed to do, and how they see its function

I believe a tangible example of this (and reasonably relevant to this Forum) is the fact that modern trains are designed and built for export in Germany by German companies but are not built for export in Britain by British companies even though in times past British companies built trains for the world. It's not as if Germany is a cheaper place to build things.

 

...R