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Monthly Archives: April 2011

Facebook Inc: The fastest growing company

Reports shows that internet companies are growing at a rapid rate. Dumisani Mahlangu investigates Facebook Inc.

It did not come as a surprise to learn that Mark Zuckerberg, the founder of facebook has won the most coveted price of “Time 2011” as  the 2011 Times most influential person. We use facebok for many different reasons ranging from marketing a product to connecting with friends,relatives and colleagues.

Facebook is the fastest growing company since 2004. In January 2011, facebook Inc was valued at $50 billion, and at the time of writing this post, it is worth $65 Billion. Its market valuation is twice that of internet giant Yahoo.Whether facebook Inc is ready to go public it is a debate that is discussed in the facebook inc’s boardroom. It seems that Mark Zurkerbeg  is still enjoying the idea of being a private CEO.

Time Value of Facebook:

As it nears the seventh anniversary of its founding in a residence of Harvard University, Facebook is more mature than google when it went public in 2004. At that time, google was worth $24 billion.  However, it is interesting to note that, by the time google turned seven, investors placed it to the value of $ 90 billion.

Time will tell. The $65 billion market valuation of facebook Inc, is twice more than that of Yahoo. It is  also worth more than  ebay-but still less than- Amazon. How does it fare when it’s being compared to that of google. In 2011, the market valuations of Google stands at about $ 200 billion.

Facebook has grown quickly as a business, even as it seeks to retain a startup culture, valuing innovation, hiring the smartest engineers from its neighbors and gobbling up small tech companies.

Why is facebook worth this much?

According to msnbc  facebook inc is valued to it’s current worth mainly because f the following factors.

  • It has over 500 million users, and these people share about 30 billion contents on the site.
  • Although facebook is free, their revenue is generated through the selling of highly targeted ads. It is to become a marketing mecca soonest.
  • It has the most smartest human capital, I mean it employs engineers, financial experts and computer scientists.
  • Large companies are investing in Facebook Inc, such as Microsoft, digital sky, Goldman Sach, to name but a few.
  • It generated $1.29 billion in online ad revenue in 2010.

Pictured detailed report  of  who owns facebook?

Facebook is owned by number of investors ranging from investors to musicians. The biggest shareholders in Facebook Inc are facebook staff and Mark Zuckerberg with the holding of 30 percent and 24 percent respectively.

Picture by Dumisani MAhlangu

Source: May issue of GQ Magazine, pg 28.

The establishment of facebook was indeed, a heavenly invention. For now, let me go like the likeable statuses on facebook. Connect with me!!!!!

Source: May issue of GQ South Africa, Time Magazine and MSNBC.COM.

 
3 Comments

Posted by on April 30, 2011 in Business

 

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Mergers & Acquisitions: It’s all about joining forces!!!

Mergers and acquisition has been a very interesting point in business. We have seen how some firms in the retail sector have been struggling to strike a deal. Let me not mention any names.

Today, this post is about mergers and acquisition. I am still a student with an interest in business affairs, having said that I am merely saying that my posts are based on readings and podcasts, very reliable sources for that matter.

Mergers and acquisition refers to the aspect of corporate strategy, corporate finance and management dealing with the buying, selling and combining of different companies that can aid, finance, or help a growing company in a given industry grow rapidly without having to create another business entity. (Wikipedia,2010)

I was recently deeply inspired to follow a career in auditing. Ok, it is not like I was never interested in Auditing, I have always been, but with lots helluva doubts. Today, those doubts have been removed because two of the major black auditing firms, Sizwe Ntsaluba and Gobodo Inc are now sleeping in the same blanket. Oops, for the informal language, I mean these two firms have merged. Sizwe and Gobodo are headed by Victor Sekese and Nonkululeko Gobodo respectively. Both these firms have a good track record in the accounting sector. They have been in business for at least 25 years.

This merger comes at the right time in the accounting sector because it boast the black economic empowerment in the industry. Further than that, the thing I like about mergers is that it eliminate unnecessary competition, and it also increases the market share for the two combining firms.

The executive chairman Nonkululeko Gobodo said:

We intend on multiplying the firm in terms of number of staff and revenue within a short space of time. It will be the new house for black professionals.

The new company will be known as SizweNtsaluba & Gobodo. Will SizweNtsaluba & Gobodo be a big player outside of the big 4? The merger make this new company the fifth largest accounting firm in South Africa following The Big 4.

Matlhatsi le mahlogonolo go lena, Victor le Nonkululeko. You are an inspiration to upcoming black auditors.  To change the subject, do you know that the music industry is in trouble? That is reflected by EMI’s $2.5 billion loss last year.  All thanks to iSomething!!!!!

Picture courtesy of business Day

The picture above shows the company’s’ head Nkululeko Gobodo who sit as the executive chairman and Victor Sekese who is at the helm of the business as the CEO. The gentleman behind them is the  transaction adviser Mr Bartlett Hewu.

Source: Business Day

 
8 Comments

Posted by on April 20, 2011 in Business

 

In with the new, out with the old, it is all about re-branding

Re-branding: (n) changing YOUR image to that of a super-uber-cool YOU…..hahahahahaha!!!! 🙂

This blog article was inspired by a very good friend of mine, Es Ntshu. Check out his blog, he writes about fashion and the like.

Since this article will follow an academic approach, I suggest that you click on this blog post to read more on re-branding.

So what is corporate re-branding? It is an easy term to understand, let me say that take your mum for instance, she just got a bonus cheque and decides to do a kitchen makeover. That is an example of re-branding. So, back to business, corporate re-branding can be defined as the creation of a new name, term, symbol, design, or a combination of them for an established brand with the intention of developing a differentiated (new) position in the mind of stakeholders and competitors.

More recently we have seen one of the companies in the telecommunication sector changing its colour from blue to wait for it, wait for it RED. Vodacom is now red. The reason behind Vodacom changing its image, it wants to have the same image as its parent, Vodafone. The re-branding of a company is not just happening because the marketing manager and his team are boring bunch of people and they have nothing to do in the C-Suite. In fact, its significant goes a long way, and if stakeholders positively welcome it, we can see the company performing more than its competitors in terms of revenue and more customer attraction.

How costly is re-branding?

We might think that Vodacom marketing team just woke up last week and said “We are changing our image”. No it takes a lot of planning and budgeting. Just like you and me, considering Plastic surgery, we will need to save and plan for a new image for a dear life. Re-branding just not happen at a wink of an eye, a lot is happening in the drawing room.

Re-branding comes at a cost. Vodacom used approximately R200 million (just over $3500000) to re-brand and introduce their new image.  When Pick ‘n Pay was rebranding its image, it came at a cost of R110 million (just above $15 700 000). So ya, when marketing team considers rebranding, they definitely take cost into account. The time factor is also another aspect that cannot be discounted when the new re-branding campaign is in mind. It takes a great deal of time to re-brand a product, because you need to do an extensive research and feedback from stakeholders. It can take two years and more to re-brand a product or a firm.

Epic fail!!!!!

As much as re-branding has its distinctive advantages, re-branding could badly harm the product, the profitability of the firm and its ability to attract new clients.

Who else rebranded his firm or his product?

In recent times few firms rebranded their products and some went to the extent with their firms. Do these firms ring a bell, Cell C, PriceWaterHouseCoopers; Pick ‘n Pay and Standard Bank?

Have a look on the picture of the old Vodacom and new Vodacom below, and on the comment box, tell me what you make of the new Vodacom brand.

distinctive feature: The globe

Distinctive feature: The red speech bubble

Disclaimer:

I write this article as an individual with  deep interest in business matters and I thus not receive advertising revenue from the companies mentioned herein. How I wish I received advertising revenue.

 
5 Comments

Posted by on April 6, 2011 in Business

 

Another state-owned enterprise….

Is this the platform towards the achievement of the ambitious 5 million job creation project by the president of the Republic of South Africa, MR Jacob Gedleyihlekisa Zuma? In this blog post Dumisani Mahlangu looks at the new state-owned enterprise.

Over the past few years, we have seen the birth of numerous parastatals. Parastatals are state-owned enterprise (SOE). Not so long ago we have seen the birth of the new state enterprise in the telecommunication sector. Broadband Infraco is the new government business venture. Whether this venture will not be threatening to Telkom is yet to be seen. Let Broadband Infraco be the topic for another day.

Shhhhhhhhhhhhh, South Africans, business analysts and yes you, there is apparently a new state-owned enterprise in the mining sector.

At the beginning of March the honourable president of the Republic turned the sod at Vlakfontein mine, South of Johannesburg. There is of course more government interference in the mining sector; from the much heated debate of nationalisation to all the laws regulated by the ministry of mineral resources.

The African Exploration Mining & Finance Corporation (AEMFC) is the first state-owned enterprise in the mining sector. At the launch of the venture, the honourable president said that “….the state must actively participate in the mining industry to ensure that our national interest is protected and advanced”.

Almost four week after the business launch I am still pondering which national interest are being “protected” and “advanced” more especially in the mining sector. Can the establishment of such a business venture be a catalyst to the much debated topic of nationalisation? The answer to that question is yet to be answered. On a second thought, a more positive thought for that matter, this venture will to a great extent help in reaching that ambitious target mentioned earlier.

The background of AEMFC

AEMFC is a state-owned enterprise with (at the time of writing this article) has 27 prospecting mining rights granted by the state, and the company is still gunning for more for the platinum group metals and the base metals. The capital has been granted by the Central Energy Fund, another state-owned enterprise.

Life span, human capital and the prospect of the enterprise

The Vlakfontein coal mine apparently has 15 year life-of-a-mine and cost around R130 million.

The venture is headed by Sizwe Madondo, and he is supported by close to 200 employees. Oh, yes 200 less unemployed people.

The prospect of the venture looks promising indeed. According to the company CEO Sizwe Madondo, the venture hope to produce 10000 bbl to 15000 bbld a day of synthetic crude oil from the third quarter of 2013 and at least employing 1000 people.

Consider investing in AEMFC because it envisages being a top-five coal producer by 2020.

As I always say to my buddies that new creations yield new hopes, I am very optimistic that this venture will be a profitable one, with sound management practices, unlike some SOE’s I can’t mention here.

SOURCE

Patrice Motsepe, (2011, 4-11 March). Rather problematic. Mining Weekly, p.7.

 
5 Comments

Posted by on April 3, 2011 in Business

 

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