Quote of the Century On Running a Business

This is from a column in The Wall Street Journal,

Another way for Apple to boost market share would be to just cut prices, as Slate’s Matt Yglesias has suggested. This would effectively return Apple’s cash to its customers rather than shareholders. But shareholders ought to rejoice at that prospect. In the long run, it’s better for Apple to curry favor with customers over investors. See all that cash? It comes from customers.

I think the absurdity of the quote speaks for itself without need for any embellishment.

Also from the same article, a quote of the century finalist

these plans would eat into Apple’s margins, and investors hate when that happens. True, but they would drive sales and improve Apple’s market share, which would be a boon to Apple’s future earnings, especially if you believe that its low smartphone market share leaves it vulnerable to Google.

Asking wrong questions

In the Corporate Intelligence section of The Wall Street Journal their business editor asks surprisingly wrong questions about a business.

  1. Why does Time Warner Cable need this extra money when it seems to be doing so well?
  2. Why doesn’t Time Warner simply call a price increase for what it is?

Granted he projects the first question on us readers, but all the same.  I do not think the first question deserves takedown. Since when did effective pricing to maximize profits needed reason?

Businesses do not stop adding shareholder value after some point, Be it passing on the additional income as dividends to shareholders or ploughing it back into new opportunities you don’t expect a business to say, “I think we have done enough, let us not do any more”.

Second question on the reason and how the fee was messaged. That is effective pricing 101  and we have seen this perfectly executed several times by many great companies. Can you think of Starbucks? Effective pricing is not just about setting price points but effectively communicating those changes. You cannot blame any business for not calling price increase as price increase.

There are always other reasons. That is part of the effective price communication message.

Let me be pose an equally wrong question back to him on WSJ pricing,

“WSJ raised my quarterly subscription by 50%. Why does Dow Jones need this extra money when it seems to be doing so well?”