Renault and Peugeot-Citroën appear to be engaged in a Formula One race for the top stock market trophy. Shares of both French car manufacturers have been rising steadily during the past few months. Indeed, Renault’s shares this week hit their highest level since the former state-owned company first came to the market in 1994.
But what lies behind this impressive if surprising performance? It is not significantly improved results. Both car groups are still losing market share in Europe and their sales have been stalled. Both are also engaged in delicate restructuring – so delicate there have been allegations that workplace stress may have contributed to recent suicides of employees at both companies.
In spite of these tragic events and lacklustre performance, the financial markets are apparently buying the recovery stories being peddled by the two companies’ celebrity managers.
Carlos Ghosn of Renault this week again confirmed his optimism and longer-term performance targets. Renault has unveiled two of the 26 models it plans to launch in the next three years to recoup ground lost to European and Japanese rivals.
At Peugeot-Citroën, new chief executive Christian Streiff is due to unveil the new Peugeot 308 hatchback, which is also supposed to revive flagging sales.
In the case of Renault, a small Twingo was unveiled last week with all the usual fanfare. But investors apparently failed to notice that behind all the marketing noise, Renault has actually scaled back its sales ambitions for the new car.
Surely this is an admission that one of the company’s most popular products is facing tough competition. The resurrected Fiat is about to relaunch its trailblazing 500 next month, while Japanese and German producers have continued to make inroads in the small-car market.
Investors appear to be betting that things cannot get worse at Renault and Peugeot and that new products and restructuring will lift performance. But at this stage investors can only count on the encouraging words of Messrs Ghosn and Streiff. Much rests on their shoulders, but it is still far too early to say with conviction that they will be successful.
And then there was one. The incarceration of Takafumi Horie, the young internet iconoclast who tried to take over Fuji Television, means that all the attention these days is on his older peer (all of 42), Hiroshi Mikitani.
Mr Mikitani is making a play for Tokyo Broadcasting System, one of the country’s oldest and most venerable broadcasters. It has been a long, arduous battle, one that started at the end of 2005. And Rakuten, his internet company, and TBS are set for a proxy showdown at the end of the month.
After agreeing a tenuous truce last year, the two companies are at it again. Mr Mikitani has argued that a broadcaster cannot survive independently in this era of convergence, where people increasingly turn to the internet to get their entertainment. Fair enough.
But analysts point out that if Rakuten wants content, there are a slew of smaller broadcasters that could be bought far more cheaply. And its key strengths are e-commerce and e-travel, not broking or consumer finance or even broadcasting.
The Rakuten-TBS battle has dragged on for so long that some might wonder if Mr Mikitani still remembers what makes for a compelling business argument.
Groves of Academe
Academe is indisputably a good cause, so Man Group’s funding of a new institute of quantitative finance at Oxford University should be applauded.
But the venture has a solid corporate logic too – greater than that behind the hedge fund group’s sponsorship of, say, the Man Booker Prize, the UK’s best-known book award.
If work at the institute spawns some promising alternative investment techniques then Man will have first refusal on the intellectual property, assuming it is prepared to pay a fair price for it.
By relocating the Man “laboratory” for in-house research and development to the university, the group also hopes to foment some useful interaction between the pure academics upstairs at the institute and the company technicians downstairs at the lab – while, of course, maintaining commercial confidentiality.
While Man will be happy to use its Oxford presence as a way of scouting for fine minds, it is also worried about academically minded employees drifting off to the ivory tower.
The discrepancy between the university stipends on offer to institute staff and the City-style salaries paid to Man lab workers will surely help dissuade defectors.