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SAAB – Now What?

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By Brendan Moore

As you may have read, Saab’s slow death rattle was halted last Friday. Two small Chinese firms, Pang Da and Youngman, offered again to purchase Saab from the floundering Swedish Automobile, a company born from the ashes of the GM abandonment, Spyker’s purchase of Saab, and then, the subsequent divesture of the Spyker supercar part of the business. 

The time, Swedish Automobile said yes to the acquisition, staving off what would have been certain liquidation of Saab. So, it now looks like Pang Da Automobile Trade Co. and Zhejiang Youngman Lotus Automobile Co. will probably be the proud new owners of Saab, and all for the laughably low price of $142 million USD. 

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Saab’s Uncertain Turnaround Continues at a Stagger

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Since the last piece I wrote about Saab, Saab Turnaround 2011 – The Struggle and the Pain, there have been subsequent machinations in Trollhättan, as the Swedish auto manufacturer tries desperately to live another day in order to facilitate its long-term survival. 

Just to recap regarding the emergence of Saab’s new Chinese partner, and possible saviour, Pang Da: 

After a deal with Chinese SUV-maker Hawtie fell apart, Saab immediately fell into the arms of Pang da, a more well-known Chinese company that is a vehicle distributor in-country. Pang Da currently imports and distributes Toyota, Subaru and Honda brands in China. 

The initial agreement had a commitment by Pang Da to buy Saab vehicles in two tranches. An initial purchase worth 30 million euros has already been agreed to and a subsequent tranch worth 15 million euros is scheduled right behind that, Victor Muller, CEO of Spyker, told journalists in Sweden in May. Muller then added that the first tranch was already on a train, heading for China. 

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RIM Needs a Turnaround Now

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The past week has seen investors in Research in Motion (RIM) heading for the door with a wild look in their eyes, breathing hard with their ears pinned back. 

The share price of RIM has plummeted over 50% since the beginning of 2011; a trend that has accelerated recently because of the brickbats thrown at the new BlackBerry tablet by reviewers, the fact that no new smartphone product/update has been announced, and, a drop in earnings. 

RIM is No. 3 in the smartphone market behind Apple and the Google-platform Android platform smartphones, but that spot is looking more and more tenuous everyday as RIM continues to lose market share. Comscore says RIM’s market share in the smartphone sector has taken a massive dive from 40% in 2010 to the current 26%. And, BlackBerry sales last quarter have experienced their first quarterly drop in sales since 2005. Lastly, the market cap of RIM now sits at $14 billion USD, down from $80 billion a scant 36 months ago. 

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Saab Turnaround 2011 – The Struggle and the Pain

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In February, I wrote a piece titled “Can Saab Be Turned Around?” in which I pondered the chances of Saab being able to do a herculean amount of work with what little they had to work with, and, in the process, turn themselves around. 

Since that time, Saab has plunged into a financial abyss, been forced to shut down production, and taken on one Chinese investment partner (Hawtie), and then been forced to abandon that deal within two weeks because the Chinese company could not get the required permissions from the Chinese government to do the deal, and then, take on another Chinese business partner (Pangda). 

What bought on the aforementioned sudden fall, you might ask? 

To put it succinctly, the CEO’s rash actions. Saab had been paying all of their suppliers late for months, trying to conserve their cash flow, more or less “stealing from Peter to pay Paul”, which in this instance meant they were trying to put more money into sales, marketing, research and development; the first two things they desperately need to do to get more cash now (by selling some cars), and from the development perspective, they need to get the next generation of the 9-3 moving along, which is their volume model, and which needs an update. 

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Experience and the Turnaround

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While at a business conference earlier this year, a fellow I had just met mentioned to me in an offhand way that they (his business unit) had just hired a young guy out of a prestigious business school program to “fix” their business, which has been on the decline for the past three years. They hired this guy as a permanent employee, and the CEO had great hopes that he would bring the company back into the black by the end of this year, using the latest business strategies. He reports directly to the CEO, not the head of the business unit.

After all, he did have a perfect GPA at the B-School he attended.

I hope that works out for them, but I did give him my business card. “Just in the instance that the task turns out to be a little bigger than you thought”, I said.

Now for some business-style preaching:

When managing a business turnaround, there is a great deal of reliance on data, on forecasts, on costs, on efficiency, on quality, etc. And many of the things you do to fix the company are the things taught in most business schools and/or internal management training programs at large corporations.

So, any young over-achiever right out of business school with the most up-to-date academic knowledge can probably fix what’s ailing your business and get it turned around pretty quick, right?

I’m waiting…

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Rovio Mobile, Developer of Angry Birds, Gets $42 Million in Funding

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The newest overnight sensation of the digital gaming industry has now officially been crowned. Rovio Mobile, a tiny mobile gaming company out of Finland run by Niklas and Mikael Hed (cousins), has ridden their Angry Birds game to lofty marketplace success (40 million active users) and a financing round of $42 million USD, led by Accel Partners and Atomico Ventures. 

Of course, someone gets the obligatory board seat, and in this case, that someone is Niklas Zennstrom, a co-founder of Atomico Ventures, as well as another company named Skype. He is going to sit on the board of Rovio Mobile, his new investment. He also issued the even-more-obligatory statement, saying, “Angry Birds is one of the fastest-growing online products I’ve seen, growing even faster than Skype, and the company has done a brilliant job of extending it across different platforms and merchandise.” 

It’s worth noting that little Rovio put out 50 titles before they went platinum with Angry Birds, courtesy of the explosion in smart phones; now that they have a thoroughbred in their stable, they intend to ride that horse until they can breed another winner. 

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