The Economist posted a nice chart this week of the number of mentions of the word “Globalization” in their magazine since 1979 (see Going Global).

It seems that the number of mentions grew briskly through the dawning of the new millennium, with a drop-off after the dotcom bust. The number of mentions picked up once again from 2005-2007, but has tailed off since the start of the financial crisis.

Robert Cyran raised a legitimate question about Cisco’s (CSCO) growth trajectory and corporate strategy in a recent New York Times article (see Cisco’s Run of Spending). According to Mr. Cyran:

Cisco, the computer networking giant, has spent the last decade acquiring rivals and buying back stock. It’s time to acknowledge that this strategy isn’t working. Investors who bought Cisco’s shares a decade ago have received no return on their investment.

Ford (F) revealed Wednesday that Geely, the Chinese automobile manufacturer, has emerged as the most likely suitor for its Volvo (VOLVY.PK) unit (see Geely Behind Ford’s Plan to Sell Volvo). According to Motor Trend, the price tag will be somewhere in the $2 Billion range.

Holding aside the sale price, if this deal goes through it would become the third high-profile purchase of a Western automobile manufacturer by a Chinese firm this year (Geely’s purchase of Volvo, Beijing Automotive’s participation in the Saab deal, and Sichuan Tengzhong’s acquisition of Hummer from GM).

I have written some about developing markets and the difficulties that firms face navigating such markets (see So You Want to Do Business in a Developing Country? and The Birth of Plenty).

As a Corporate Strategy scholar, I am generally more interested in how foreign firms make decisions to enter developing markets and how they manage their operations in those markets than the economic development path of any of the individual economies. However, it goes without saying that economic development (or the lack thereof) impacts the calculus of firms considering doing business in foreign markets. I was therefore interested to read a recent Op Ed about Russia in the Globe and Mail written by my colleague Nouriel Roubini (see BRICkbats for the Russian Bear).

In January I predicted (see Notable Bankruptcies of 2009: Q1) that “major” bankruptcies in 2009 would challenge the 383 mark set in 2001 (the high-water mark after the dotcom bubble). I even suggested that it was possible that we could exceed 400 “major” bankruptcies in 2009.

According to Bankruptcydata.com, there have been 208 “major” filings thus far in 2009. Assuming that bankruptcies are equally distributed throughout the year, this puts us on pace for 277 bankruptcies. That is tracking well shy of my prediction. In fact, bankruptcies were down significantly from Q2 to Q3, and have been trending downward throughout the year.

Last week I discussed winners and losers in M&A deals (see Acquisitions: A Great Shareholder Ripoff?). I lamented what I see as a transaction that too often rewards interested parties, top executives, and shareholders of the target firm at the expense of acquiring firm shareholders. I mentioned, in particular, how top executives on the sell-side stand to benefit from a takeover of their firm – e.g., via handsome golden parachutes and the immediate vesting of generous option packages.

I was therefore interested to stumble across a recent academic study (mentioned on CNBC.com) that details one interesting way top executives from target firms may be appropriating private rents at the expense not only of acquiring firm shareholders, but also at the expense of their own shareholders (see Should CEO Buyout Options be a Securities Violation?).

I have written much about the perils and pitfalls of acquisitions (see Why M&A Deals Go Bad, Acquisitions: A Great Shareholder Ripoff?, or DaimlerChrysler Post Mortem). So in the interest of fairness I thought I would share a story of a deal that seems to have provided value to the acquirer.

In an article that appeared in today’s New York Times, Ashlee Vance details how HP (HPQ) was able to derive value from its acquisition of EDS (EDS) (see HP’s Bet Seems a Winner). Consistent with what I’ve mentioned in previous posts, it is in the integration phase where deals are either won or lost, …and HP seems to have been able to generate both cost saving and revenue enhancement synergies through this deal.

It’s no secret that most acquisitions fail (see Why M&A Deals Go Bad). Academic research has long demonstrated that acquisitions generally fail to create value. But if most acquisitions fail, the question then becomes: Who wins and who loses?

Kudos to David Weidner of the Wall Street Journal for asking the question (ht David). In his insightful piece, Wall Street’s Biggest Con, David sheds some light on the acquisition game:

Kudos to The Economist for recognizing that overcapacity continues to plague the automobile industry and just won’t go away (see Trouble Down the Road). Although cash-for-clunkers and other government subsidy programs meant to prop up the ailing automakers have helped the industry avert imminent disaster, the reality is that by enacting such programs governments have simply kicked today’s problems down the road until tomorrow. Not one of the major automakers has been allowed to fail in any meaningful sense, whereby massive productive capacity has eliminated from the industry.

According to The Economist:

There are many compelling reasons that companies look to developing countries for growth. Less-developed countries hold the promise of large, fast-growing consumer markets (e.g., the BRICs); an abundance of cheap labor; and access to otherwise unavailable natural resources. Managers are often lured by this unbridled potential.

But there is a reason these countries are considered “developing” – largely because of the under-developed state of their institutional environments (see also Summer Reading: The Birth of Plenty).

I meant to write something last week about the market for corporate control and the recent spate of high-profile deals. I never quite got around to it. Thankfully, Michael de la Merced did (see Signs of an Upswing in Merger Activity).

What I especially appreciate about Michael’s piece (see also Private Equity: Out of the Ashes) is that it faithfully reports the recent uptick in corporate transactional activity, while being careful not to exaggerate the trend or extrapolate from the coincidental timing of a small number of high-profile deals. Michael is careful to point out that we are a long way from a “healthy” market for corporate control, and I could not agree more!

Several months ago I wondered aloud whether the current rally had legs based on Q1 corporate earnings (see Are Better-than-Expected Earnings Illusory? or Corporate Earnings Redux). I concluded in June:

The key then to the future of corporate profitability lies in whether you believe corporate earnings have bottomed out and will now begin to increase from a lower base, or whether you believe that there is still substantial downside risk that increasing unemployment and decreased consumer spending will continue to put a crimp in profitability. Given the nearly 40% rally in equity markets over the past several months, market participants clearly believe the former. I fear that the latter might be more representative.

The New York Times published a fascinating piece Sunday about Chrysler’s acquisition by Cerberus, and its main protagonist – Steven Feinberg (see For Private Equity, A Very Public Disaster). Louise Story was somehow able to secure an interview with Steven Feinberg, the notoriously reclusive Chief of Cerberus. In commenting on the interview, Louise points out:

…How he [Feinberg] and his private equity firm, Cerberus Capital Management, choose to describe their journey with Chrysler is a delicate matter. If he says he should have shelled out more money to help Chrysler, he could face the ire of investors who have already suffered heavy losses on his gambit. If he says he should have simply dumped Chrysler’s auto arm, while clinging to its more promising finance unit, he could be accused of caring more about his wallet than he did about Chrysler’s workers and the automaker’s role in the economy.

For readers of my blog, you know where I stand on the private equity industry. I have suggested for several years now that private equity activity would be entering a long slumber (see Private Equity: The End of an Era and Private Equity – Stupid Money Chasing Stupid Deals).

I was therefore interested to read an article that appeared in last week’s issue of the Economist claiming that private equity might be on the rebound (see The Barbarians are Coming, Again). According to the Economist:

I occasionally receive requests for interviews from media outlets. I try to be generous with my time, especially if the topic is one that I feel strongly about, and I feel informed enough to add value. But the latest request that I recieved has to go down as the oddest I’ve yet received, and one that, quite frankly, was a bit disturbing.

It began with the following email:

After my recent posts on university enrollments and affordability (see Enrollment Drops at Private Colleges and The Future of U.S. Higher Education), I received an email from Marc Scheer, author of No Sucker Left Behind: Avoiding the Great College Ripoff. On his site I found a link to a recent Wall Street Journal article (see Weighing Price and Value when Picking a College) that describes some of the very same effects that I anticipated in my earlier posts.

According to the Wall Street Journal:

Back in March I suggested that an open discussion about the future of financial economics seemed warranted (see Future of Financial Economics). I wrote:

Are the fundamental assumptions about human behavior associated with the dominant paradigm in financial economics appropriate?

Given my interest in the history and development of universities and colleges, I found today’s article about private college enrollments interesting, though not entirely unexpected (see Enrollment to Drop at a Third of Private Colleges). According to Bloomberg:

Almost a third of U.S. private colleges expect freshman enrollment to decline in the 2009-2010 school year as families struggle to pay bills and hold down debt, according to a survey.

A friend and colleague of mine who accepted a job at a European university jokingly explained in an email yesterday that his move to London could easily be explained by the fact that he had always wanted to become a currency speculator. I asked whether he really want to bet against the Dollar, or for that matter, for the Pound. He preceded to ask me what I thought about the strength of the Dollar, and the strength of the Dollar vis-a-vis the Pound.

I wrote the following, off-the-cuff response (edited slightly to censor expletives and to improve readability):

Interesting stuff. In an article published last week at Slate (ht Barry Ritholtz), Daniel Gross takes issue with a McKinsey & Co. report about the The New Power Brokers (see McKinsey’s Cracked Crystal Ball). Gross criticizes McKinsey for offering inaccurate predictions with respect to the rise of private equity funds and hedge funds. Gross writes:

In October 2007—the precise market top—McKinsey Global Institute, a think tank nestled in the confines of the blue-chip consulting firm McKinsey & Co., issued a report documenting the stunning rise of four comparatively new pools of capital—hedge funds, private-equity firms, Asian sovereign capital (Asian central banks and sovereign wealth funds), and petroleum exporters (companies, governments, and central banks of oil producers). These new power brokers had been major beneficiaries of recent trends in the global economy. And if existing trends were to continue—and why wouldn’t they?—they’d be even bigger in a few years.