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stopped doing so, investing their profits into network upgrades instead, their stock value would crash Bells only increase their capital spending by 10 to 15% a year The Bells, which control 88% of the 185 million local lines in the US, also offered broadband, but were more interested in selling T1 lines to corporate clients at $1200 a month than offering DSL to consumers at $50 a month, according to Rose The article further suggests that the first commandment to any executive in the Bells is to avoid risk, since risk taking could lead to mistakes and mistakes could thwart a climb up the corporate ladder to Carpetland (the head office in the rolling hills of New Jersey s hunt country was so deeply carpeted, that it muffled any discordant sound Rose s article said that you could take a nap in there and nobody would ever disturb you).

Be aware that removing the borders between groups destroys the traditional functional organization and may result in managers becoming individual contributors, presidents reporting to managers, or whole groups dispersed and reallocated elsewhere In some cases you may create an entirely new division organized around supply chain processes IBM did just that in 2002, when it established the integrated supply chain (ISC) organization5 Within just 12 months, IBM pulled together all the pivotal functions of the supply chain, combining its front-end customer support teams, manufacturing, procurement, and logistics into a new unit In so doing, it brought together about 19,000 employees in 100 locations in 59 countries IBM had long used a solutions-based business model one that combines technology, products, and services and wanted to adapt its supply chain to support this model.

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In such a wellcushioned and protected environment, is it any wonder that the build-out of the broadband network is not proceeding with anything approaching enthusiasm or vigor The hide-bound culture of the ILECs is the primary obstacle to the success of streaming media Similar horror stories can be told regarding the rollout of broadband in the UK The incumbent network, British Telecom, now a privatized utility, was also compelled to open up its local exchanges to competitive service providers However, so few providers have succeeded in installing broadband equipment into the decrepit old exchanges that serve the local loops that the government has been forced to take note.

In the valuations that follow, we vary growth rates, NOPMs, and cost of capital to see how changes in these variables affect intrinsic values Varying inputs result in a range of value for a stock rather than a single point, and it allows us to see which cash flows and cost of capital estimates are most important to the different companies When we value a stock, we want to use assumptions that are conservative, particularly regarding growth rates Based upon our valuation, we rate each stock as a buy, sell, or hold Our rating is a hypothetical rating Do not buy, sell, or hold a stock based on anyone s valuations other than your own, particularly valuations based on outdated information, as all of these will be when you read this book You make your own decisions based upon your own analysis.

It has been reported anecdotally that when the network was surveyed for DSL upgrade, British Telecom rediscovered long-forgotten exchanges and found that many of these were unsuitable for DSL upgrade simply because the fabric of the exchange building was no longer sound and would require rebuilding to allow outside companies to place their equipment in those exchanges with safety In other words, the allegation is that the cost of the building work prohibited the opening up of the local loop to competition in several areas I live in the county of the UK that has the highest concentration of millionaires per capita anywhere in the country, yet sitting here in leafy stockbroker-belt Surrey, I am unable to get DSL connection My local exchange, Clandon, is not suitable for upgrade, according to British Telecom They can offer me no date for when this might not be so.

It found that just changing the reporting structure, moving like skills together, and breaking down the walls between manufacturing, procurement, and distribution yielded immediate benefits The next steps were to establish common goals and objectives, well-defined roles and responsibilities, and a strong management system with clear measurement and accountability Kraft Foods North America also created an organization designed around core supply chain processes with the expectation that streamlining the supply chain would reduce the cost of goods sold and improve the company s bottom line6 It structured an organization that encompasses all the activities that go into delivering products to customers, from planning and production scheduling to transforming raw materials into finished goods and then packaging and distributing those goods The goal of an effective supply chain organization is to optimize the end-to-end order-fulfillment process not individual functions all the while achieving the lowest total cost.

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