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Mid-Term
Results & Tea Leaves?
By Michael Alan Hamlin
September 2003
Just back from one of the great
vacations of my lifetime in Australia's Yarra Valley, I began pouring
over the mid-term financial results for our little boutique consulting
firm and found myself abruptly back in the saddle. But before I
get serious, if you're looking for a little quiet time mixed with
great wines and exquisite meals, then I can heartily recommend the
bucolic Yarra Valley. And it's a great place to ride out a coup
attempt.
Our trip took us first to Melbourne's bustling Victoria
Market, where we slurped down dozens of incredibly fresh raw oysters
for lunch. That evening we found ourselves at the Water Grill feasting
on lobster, huge Red Snappers, and succulent tenderloin. By noon
the next day we were at our first winery, enjoying a variety of
Chandon sparkling wines over a light lunch of cheese, cold cuts,
and fresh vegetables. And the trip only got better.
Little wonder that we weren't in any hurry to get back.
But then there were the kids, who really expected us to eventually
come home and resume our nurturing responsibilities, and I have
a feeling our colleagues at work were anxious for us to get back
and relieve them of the burdensome work we offloaded while away.
They might have wondered how we were doing, in fact, since I left
strict instructions that we weren't to be disturbed, and worked
hard at staying out of touch.
Staying out of touch, by the way, isn't easy to do
in this wide, wide connected world. In my view, going incommunicado
is akin to withdrawal from nicotine, or something even more insidious.
I found myself uneasy without the usual continuous flow of information,
updates, and questions. And as people often do in an information
vacuum, I began to thirst for reassurance that the kids were fine,
that the office was functioning, and that clients were being kept
happy. I realized that I'm an information junkie, and that the only
way to cure myself was to go cold turkey.
Thankfully, that wasn't too hard to do after a couple
of rounds of wine tasting. And since we were in the Valley in the
dead of winter, we pretty much had the wineries to ourselves. At
the Tokar Vineyard, owner and multi-millionaire industrialist Leon
Tokar served us himself, and even demonstrated what appeared to
be sincere appreciation for our investment of a paltry A$50 in a
Pinot Noir and Cabernet Sauvignon. Leon made his money manufacturing
those metal stanchions with the nylon dividers that pull out to
connect to other stanchions, which are exported the world over.
But his love is wine making - and since he's not making any money
at it, it's also a good tax deduction.
So I was feeling pretty good about the vacation and
a bit reluctant to get back to work when I sat down to look over
those mid-year financials. I found, however, that the results were
almost as buoying as the vacation. Our little firm had the best
six months it's ever had, and our efforts to control costs have
clearly begun to pay off. In fact, while we're certainly not going
to be making any major acquisitions anytime soon, the results were
downright satisfying.
That is, until I began to wonder what the next six
months is going to be like, because about half of our revenue comes
from things we do in the Philippines. Last month, I suggested that
we are entering a period of uncertainty, mostly on account of the
upcoming presidential elections, and the dearth of candidates that
are both truly popular and competent - not to mention honest and
respected.
Analysts are in disagreement over the impact of the
failed coup on business. Their prognoses fall into three categories.
The pessimists believe that the Philippines was already so far off
the radar map that the coup couldn't possibly make things worse.
The optimists somehow believe that the coup will make it more difficult
to sustain the miserable level of traditional foreign direct and
hot-money investment that we do receive, let alone increase investment
in view of intense competition from around the region.
The realists believe that not much has changed about the Philippines
that would cause investors to re-evaluate their positions. Intel
and Texas Instruments are good examples. They've both been here
for around three decades through the best and the worst times and
have thrived. The coup is absolutely irrelevant in terms of the
impact, or lack of impact, on their manufacturing and distribution.
There are plenty of other exporters of products and services for
which the coup was, in a business sense at least, also a non-event.
Unfortunately, not a lot of people seem to be paying attention to
this reality. I hope that changes, because I'd love to have another
great six months. But I have no idea whether people will surrender
to perception, or leverage reality, and go on about business. Under
these circumstances, it's impossible to make projections for the
next six to 12 months on the basis of business and economic fundamentals.
So instead, I think I'll try tea leaves.
(Michael Alan Hamlin is the managing
director of consultancy TeamAsia and the author of three books on
Asian economies and companies. His latest book is Marketing Asian
Places, of which he is a co-author (Wiley, 2001), and he is
currently at work on High Visibility: The Making and Marketing
of Asian Professionals into Celebrities. Write him at mahamlin@teamasia.com.).
Copyright © 2003 Michael Alan
Hamlin. All Rights Reserved.
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