California has got really good at building giant batteries
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Times
5 hours ago
- Times
Giving critics the cold shoulder does CEOs no favours
Few things, in financial news, make better copy than a good row between the chief executive of a quoted company and the analysts paid to follow that company's fortunes. Plenty of well-known chief executives have become embroiled in such rows. One of the most famous came during a Tesla earnings call in May 2018 when Elon Musk interrupted Toni Sacconaghi, an analyst at Bernstein Research, who had the temerity to ask about the company's capital spending. 'Excuse me. Next,' said Musk. 'Next. Boring bonehead questions are not cool. Next?' Joe Spak of RBC Capital Markets, who followed, received a similarly hostile reply to a question about margins: 'Sorry, these questions are so dry. They're killing me.' More notorious still was the occasion in April 2001 when Jeff Skilling, chief executive of Enron, was asked by Richard Grubman, a fund manager at Highfields Capital Management, why the energy company had not supplied a cash flow statement. 'Well, thank you very much, we appreciate that. Asshole,' Skilling replied. Enron filed for bankruptcy eight months later and Skilling was sentenced to 24 years in prison, later reduced on appeal. There have also been some entertaining bust-ups with analysts on this side of the Atlantic, none more so than in August 2005, when James Eden, of Dresdner Kleinwort Wasserstein, asked Sir George Mathewson, chairman of Royal Bank of Scotland, why he thought the bank's shares were so cheap. • The Tesla leaks: what it's really like to work for Elon Musk Asked what he meant, Eden replied: 'There's a perception amongst some investors that [the RBS chief executive] Fred Goodwin's a megalomaniac.' Sir George was recorded as replying, under his breath: 'Shoot him.' Some chief executives try to get around this testiness by speaking only to selected analysts. Netflix raised eyebrows when, eight years ago, it dispensed with open question and answer sessions with sell-side analysts and instead began hosting pre-recorded video interviews with just one analyst. More recently it has taken to collecting 'questions from the analyst community' which are then put to the management by the company's head of investor relations. Similarly, Autonomy, the former FTSE 100 software company, was accused in 2009 of preventing critical analysts from asking questions on earnings calls. The irony is that, according to research recently published in the United States, companies and their chief executives are better off taking on their critics. Jared Flake, assistant professor of accounting at Boise State University in Idaho, analysed 101,225 earnings calls and measured the outcomes of interactions between company managers and analysts regarded as 'unfavourable' — which he defined as 'those who either have an outstanding sell recommendation or have recently downgraded their recommendation'. He found that when a manager answered a question at length from an unfavourable analyst, that analyst was 40 per cent more likely to upgrade their rating of the company's stock than the average unfavourable analyst who did not ask a question. Flake adds: 'I find stronger stock price reactions to forecasts issued by managers who regularly interact with unfavourable analysts.' • Ian King: Substack reels in star investors as media rivals feel the pinch The length of the answer is crucial, though, as it points to an executive giving a considered answer. He found that where a chief executive gave a 'non-answer' such as 'We do not provide this disclosure', or 'I can't give you any specifics', the analyst was 11 per cent less likely to upgrade their rating than the average unfavourable analyst who received a proper answer. Flake says: 'High quality answers, as proxied for by length, further increase analysts' tendency to upgrade … The results suggest that analysts' upward revisions result from not only the opportunity to ask questions, but also from managers' responses.' Although interacting with unfavourable analysts does enhance a chief executive's credibility, not all those taking part in earnings calls will do so, particularly when they have discretion over how much time they allow for questions and the order in which questioners are invited to speak. Unsurprisingly, Flake found that company executives were more likely to interact with unfavourable analysts when compelled to do so, for example after recently disclosing bad news or when a highly rated analyst covering the company was poorly disposed towards it. Yet there are also incentives other than the share price reaction to engage with critics. Flake cites evidence that managers give greater priority to negative questions when they face higher competition, so as to highlight uncertainty and deter rivals. There is also evidence that chief executives allow more critical questions, for similar reasons, to raise their bargaining power during union negotiations. Good chief executives, Flake suggests, will also welcome the extra scrutiny from interacting more with critics because it sets them apart from peers. There may be lessons here for the wider financial services industry. Robert Fullerton, senior research analyst at the wealth manager Hawksmoor Investment Management, observed last week, discussing Flake's research, that it was noticeable how fund managers approached him and his colleagues differently 'if for example the fund has not performed well or something isn't working'. He added: 'The CEO/analyst interaction research suggests this and similar issues are best addressed openly, with some short-term pain paying off in the long run and a better outcome for everyone.' Quite. When the euro replaced legacy currencies, the distinguished financial commentator Christopher Fildes launched his Negroni Index, a way of measuring purchasing power parity. His benchmark was that the cocktail should cost the equivalent of 3,000 old Italian lira to the pound and he noted with pleasure in 2001, when sterling was riding high against the euro, that he could buy three for £10. Fildes's index came to mind during a recent family holiday in Croatia which, since the last visit three years ago, has adopted the euro. In August 2022 a supermarket bottle of Plavac, a popular local red wine, could be obtained for 39 old Croatian kuna — about £4.30 back then. That same bottle now goes for around €10 (about £8.60). Since sterling is only about 2 per cent lower against the euro since August 2022, the conclusion must be that joining the single currency has proved inflationary for Croatia. Either that, or the wine has got better.
Auto Car
12 hours ago
- Auto Car
Musk drama means Tesla's cars need to be better than ever
Product testing doesn't exist in a vacuum and this is particularly true of cars. The key in your hand and the body of metal sitting in front of you are only there because a murky swirl of business and geopolitics made it possible. Often this context is outwardly dull and you can largely ignore it. Sometimes it's unbelievably interesting and you need to remind yourself to focus on the car. I'm thinking about the product-business-politics ecosystem now because in a couple of weeks we're giving the new Tesla Model Y the full Autocar Road Test, in what should be the popular Long Range Rear-Wheel Drive form. As ever, it will be fascinating to see exactly what Tesla – in many ways an era-defining success story that has always talked a big game about its technology leadership – can deliver. Efficiency and performance for years constituted a twin-pronged attack that few else could match as the brand dominated the sales charts. The cars' uniquely lounge-like atmosphere was also a much-loved Tesla hallmark. These days things are different. Tesla still sells strongly in its key markets but those sales are dipping and the company's public image has been in the wars. There's a growing body of direct competition that simply didn't exist three or four years ago (and much of it has adopted Tesla's minimalistic cabin layout, how very dare they.) Moreover, US legislation looks likely to kneecap a crucial revenue stream, as president Trump's 'Big Beautiful Bill' seeks to curtail emission-offsetting regulatory credits. Last year, Tesla made almost $3 billion from the sale of these credits; it's not chicken feed. It means the current product really has to stand up – right now, while it's still passably fresh and capable of swelling the coffers. In two years, Tesla's current line-up won't just feel a bit long in the tooth but outright elderly. Then you're probably into a downward cycle. Can't sell, can't invest, and all the while your regulatory-credit side-hustle has run out of road. We know that many people will never again grace a Tesla showroom or the company's website. Musk's political leanings and his role in the USAID shutdown, the humanitarian fallout from which will only be revealed in years to come, aren't with commercial consequence. Those potential customers are lost to Audi, BYD and whoever else. But there are plenty more who will still buy a Tesla if it happens to be the car that best meets their needs and aspirations at the right price.
Daily Mail
a day ago
- Daily Mail
Favorite car of 2000s hot rodders returns after 19-year wait... but gearheads are furious
A cult-classic car is coming back to America. Gas-burning fans won't be happy. Acura is bringing back the RSX name after nearly two decades — but fans of the early 2000s tuner coupe may be in for a shock. The new RSX won't be the sleek, two-door sport compact that became a street-racing favorite. Instead, it's a four-door electric SUV designed for family errands. The company hasn't released range, price, or charging speed. For now, the company has only revealed its initial design that bears a striking resemblance to Tesla's Model Y. The original RSX debuted in 2001. It was inspired by a 2-liter four-cylinder engine, sharp handling, and a smooth-shifting manual transmission that earned praise from enthusiasts. Drivers tricked out their cars with tuned engines, custom rims, flared bumpers, and vinyl wraps. The RSX became a fixture in car culture, even landing seven appearances in the Need for Speed video game franchise. Acura discontinued the coupe from the US market in 2006. But the vehicle still has several Reddit threads with thousands of fans and owners sharing their latest upgrades and changes. That legacy is why some fans are unhappy about the redesign. 'This trend of enthusiast cars into family vehicles is getting out of hand,' one RSX owner complained on Reddit after seeing the new model. Plenty of automakers have been turning to old, well-loved nameplates to aid their transition to electric vehicles. Ford revived the Lightning, once a hyper-powered sports truck, as its all-electric pickup. It also tapped the Mustang name for its crossover EV. GM did the same, relying on the iconic Blazer nameplate for its higher-priced electric crossover. But Acura says comparisons to its old RSX are misguided. 'The new Acura EV is not a second-generation RSX,' brand communications manager Chris Naughton told the Daily Mail. For drivers still craving gas-powered thrills, Acura points to the revived Integra — a sport-oriented hatchback it brought back in 2022 after a 16-year hiatus. Built in Marysville, Ohio, the Integra shares its plant with the upcoming RSX. The new RSX is a four-door crossover electric SUV with a sport back shape The move also comes after Acura discontinued the mid-size TLX sedan for 2026. Honda representatives told the Daily Mail that the plant no longer has the space to build the similarly sized Integra and TLX today. The plant's shift marks a huge milestone for Acura's parent company, Honda. The Ohio-built EV will be the first car built on a battery engineered in-house. Acura's current electric offering, the ZDX, rides on GM's Ultium platform. Honda has been working to bring its own, less expensive battery technology to the US market. Honda plans to introduce two new EVs, called the 0-Series, to the US market with a base prices around $50,000.
