As for Dixons it was a simple commercial decision Sally White is a self-styled "punter and long-term investor" who has worked in financial journalism, stock- broking and private equity since the 1960s. Get the balance wrong, however, and the consequences are likely to prove disastrous.jeremy.warner independent.co.uk. If a business leader as straight talking and loyal to these shores as Sir John Bond, chairman of HSBC, can threaten to move his head office overseas, things must be serious This is not a man who makes threats lightly. Big business is often wrong about things, and it is of course the job of governments to protect the interests of the little guy. Today's meeting between the Prime Minister and the Multinational Chairmen's Group, ought to serve as the strongest possible wake-up call.While the Prime Minister has been worrying about his place in history, the business environment in Britain relative to others has deteriorated sharply on a rising tide of taxation, social legislation and red tape. I've no doubt that the cycle is beginning to turn, but it's incredibly slow and there is certainly no chance of a return to boom conditions any time soon. There may indeed be enough momentum to carry the FTSE 100 through to 5000 by the end of the year.Yet the foundations for all this bullishness look shaky. Most of this optimism is based on now indisputable signs of recovery in the US economy. Is that enough to support share prices in London and Europe too?The stock market was certainly a buy at 3,287, the level the FTSE 100 plumbed in the run up to the Iraq war, but there's been a decent rally since and without robust recovery in the domestic economy, further short term gains seem hard to justify That doesn't mean they won't happen. But then Freeserve is a comparatively small part of the whole, so the judgment was an easy one for Mr Clare to make. He's a hard man, that Mr Clare.Market challengeInvestors and analysts alike seem to be in bullish mood as they return from their summer hols, and although that may be as much in hope as expectation, the trend and momentum is inescapably upwards.
AOL's deep pocketed determination to buy its way back to market leadership could be worth anything up to £100m to Dixons over the next five years in upfront payments and revenue sharing arrangements. The downside is the damage teaming up with AOL does to Dixons' remaining shares in Wanadoo, worth about £300m. Freeserve was putting a brave face on it, but with nearly a half of new customers still acquired through Dixons, there's no doubt it's a big blow.As for Dixons, it was a simple commercial decision. Freeserve was merged with Wanadoo of France, and Dixons began progressively to sell down its shareholding Yesterday's deal with AOL cuts the umbilical cord for ever. The old subscription model, pioneered by AOL in the US, is almost completely dead.As the dot bubble waned, the market in service provision consolidated. Today all internet access, whether broad or narrow band, is sold through the telecommunications charge. Within two years of launch, the company had been floated on the stock market. It even, briefly, became a member of the FTSE 100, its value eclipsing that of its parent, Dixons. Heady days.Perhaps unfortunately, you cannot claim copyright on an idea, and it was little more than a couple of nano seconds before everybody else, including belatedly, AOL, was doing the same thing. With the benefit of hindsight, simple and very obvious, but nobody else had thought of it. |
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