On the face of it, Mr Son is paying a fabulous price for ARM – a mouth-watering 60 times last year’s earnings, and a near 50pc premium to the company’s pre-bid value. But if he’s right in his vision, then it’s going to look a bargain ten years from now. Already, there are mutterings that he is underpaying, amid reports of strong sales growth.
Forgive the terrible pun, suggested by a well known City fund manager who won’t forgive me if I attribute it to him, but is SoftBank paying an arm a leg, or is ARM being sold for a son?
It will be a while before we know, yet it seems to be one of those other British deficiencies that we are good at innovation and start-ups but atrocious when it comes to developing them into global players. Too often companies are sold before they properly get going.
We really cannot use the example of ARM to show that we don’t build companies into world beaters. Because ARM is a world beater. So it’s an example of entirely the contrary, that we can and do build companies into world beaters. This is also wrong:
One of the things Theresa May promises to address in a still somewhat ill-defined and unconvincing agenda for revitalising the UK economy is Britain’s productivity deficit. This is of course the holy grail of successive post-war UK governments, and whereas some have done better than others, none has so far managed any more than limited progress in closing the productivity gap. So we must wish her luck.
One place she could usefully start is in taking on the endemic problem of “short-termist” thinking among UK investors and managers, a mind set that is deeply ingrained in British corporate, investment and banking culture.
I’ve long thought this a major part of Britain’s productivity challenge, and I’m happy to see that the City veteran and corporate financier, Sir Simon Robertson, a former stalwart of Kleinwort Benson and Goldman Sachs, agrees with me.
Measurements of productivity have sweet fuck all to do with who owns a company. they’re measures of the output (per hour normally) of people working within the British economy.
Who owns, who gets the profits, makes completely sod all difference to productivity measures. Productivity is measured by the hours those 3,000 around Cambridge put in as against the value of their output. And that’s it. British productivity will change by not one whit or iota as ownership moves from roughly 43% US, 35% UK, balance European to 100% Japanese.
It’s simply trying to measure things using entirely the wrong ruler.