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    Porsche AG-VW news, Piech out, WW in!

    I wasn't sure where to put this, so move it as needed.

    --

    High drama in the Porsche world. Imagine the egos involved.

    --

    FRANKFURT, Jan. 20 - A high-stakes boardroom battle at Volkswagen ended in a truce Friday, as Ferdinand K. Piëch, the company's chairman and an heir to the Porsche fortune, agreed to step down next year in return for two Porsche executives gaining seats on the board.

    Mr. Piëch, a powerful figure who was once Volkswagen's chief executive, has been accused by shareholders and other board members of a conflict of interest since Porsche, the sports car maker controlled by his family, acquired 18.5 percent of Volkswagen's shares last fall.

    Porsche asserted that its investment entitled it to two seats on the Volkswagen board. Other directors objected, citing Mr. Piëch's dual interests and saying that Porsche was trying to amass too much influence over Volkswagen, a company more than 10 times its size and Germany's largest carmaker.

    The dispute laid bare the web of interlocking ties among German companies, at times made all the closer by family holdings. It also raised troubling questions about corporate governance at Volkswagen, a far-flung automotive empire with public and private shareholders that has been rocked by a bribery and corruption scandal.

    Under an agreement reached between Porsche and Volkswagen's other major shareholder, the state of Lower Saxony, Porsche's chief executive, Wendelin Wiedeking, will join the board immediately, and its chief financial officer, Holger P. Härter, will be nominated for a seat in May.

    Full NYT story at:

    http://www.nytimes.com/2006/01/21/business/worldbusiness/21auto.html?pagewanted=print

    Re: Porsche AG-VW news, Piech out, WW in!

    Piech is NEVER really out, no drama here, just a little bit of "tweaking". Don't forget that Piech is a member of the Porsche family and a very respected one. He owns a huge amount of Porsche shares and since Porsche owns now almost 19% of VW and since Porsche will probably get another 3% soon, Piech is still in control...even more than before. And this is actually what worries the Land Niedersachsen (german local government), one reason why Piech had to leave. No drama here, just a few tweaks to make things look different.

    Re: Porsche AG-VW news, Piech out, WW in!

    appearance versus reality...

    Re: Porsche AG-VW news, Piech out, WW in!

    does he have enough muscle to immediately restyle the jetta and golf LOL.

    Re: Porsche AG-VW news, Piech out, WW in!

    Quote:
    RC said:
    Piech is NEVER really out, no drama here, just a little bit of "tweaking". Don't forget that Piech is a member of the Porsche family and a very respected one. He owns a huge amount of Porsche shares and since Porsche owns now almost 19% of VW and since Porsche will probably get another 3% soon, Piech is still in control...even more than before. And this is actually what worries the Land Niedersachsen (german local government), one reason why Piech had to leave. No drama here, just a few tweaks to make things look different.


    Exactly RC, now he has 2 votes instead of 1, seems he has twice the influence.

    Re: Porsche AG-VW news, Piech out, WW in!

    Having the CEO and CFO of a competitor sitting on your board seems odd to me. I am not familiar with German corporate governance practice but is the time near that these two companies merge? Otherwise how can they do this?

    Re: Porsche AG-VW news, Piech out, WW in!

    Quote:
    nberry said:
    Having the CEO and CFO of a competitor sitting on your board seems odd to me. I am not familiar with German corporate governance practice but is the time near that these two companies merge? Otherwise how can they do this?



    Better then the heir of Ferrari going on rehab after repititive overdose!
    Nick, we stick to driving the cars and let the competent people make money from our gulible minds!

    Re: Porsche AG-VW news, Piech out, WW in!

    Actually it wasn't Ferrari's heir but Fiat's that went on rehab.

    Concerning Porsche's management seating on a competitor's board, I think it is pretty normal. Porsche is now VW's largest shareholder with 18.5%, slightly ahead of the State of Lower Saxony.

    Porsche has spent Euro 3.5bn to buy this controlling stake I believe they have the right to get an appropriate representation on the board. I also think Porsche will help VW's management to focus on profitability and cash-flow generation rather than embarking on frivolous and ill fated projects such as the Phaeton, Lamborghini, Bentley, Bugatti, ....

    Re: Porsche AG-VW news, Piech out, WW in!

    Quote:
    EricAlain said:
    Actually it wasn't Ferrari's heir but Fiat's that went on rehab.



    Indeed, Lapo used to be a good friend of mine when he lived in London, it's a shame...
    But Fiat has the majority of stake in Ferrari spa, so there you go. Ferrari's heir, ie Pierro I believe, only has an honorary status now.

    Re: Porsche AG-VW news, Piech out, WW in!



    You're absolutely right .... indirectly Lapo is Ferrari's heir ... It's really a shame indeed

    Re: Porsche AG-VW news, Piech out, WW in!

    Quote:
    EricAlain said:
    Actually it wasn't Ferrari's heir but Fiat's that went on rehab.

    Concerning Porsche's management seating on a competitor's board, I think it is pretty normal. Porsche is now VW's largest shareholder with 18.5%, slightly ahead of the State of Lower Saxony.

    Porsche has spent Euro 3.5bn to buy this controlling stake I believe they have the right to get an appropriate representation on the board. I also think Porsche will help VW's management to focus on profitability and cash-flow generation rather than embarking on frivolous and ill fated projects such as the Phaeton, Lamborghini, Bentley, Bugatti, ....



    The Phaeton was the most dumbest thing Volkswagen has done in the past in my opinion. Thrown out money for nothing. Maybe it'll help Porsche a little bit to learn from it regarding Panamera development but I'll never understand why VW had to develop and build the Phaeton. Especially with that huge VW logo on it's nose and rear, horrible.

    Re: Porsche AG-VW news, Piech out, WW in!

    RC

    Atleast they were to rebadge it and name it the Flying Spur

    Re: Porsche AG-VW news, Piech out, WW in!

    This isn't really all that shcoking. I think we'll see another example of the proverb 'the more things change the more they stay the same.'

    Re: Porsche AG-VW news, Piech out, WW in!

    Why would porsche sink so much hard cash into a minor non-controlling interest in a troubled car maker. 51% is a controlling interest anything less is useless unless they have allies that total 51.

    Re: Porsche AG-VW news, Piech out, WW in!


    Porsche isn't willing to control VW, they just want to become VW's "natural partner" when it comes to share costs ...

    For the time being, at VW, voting rights are capped at 20% regardless of the actual stake.

    For Porsche they do actually already have 20% of the voting rights with 18.5% of the shares. To calculate voting rights, you have to substract treasury shares held by VW, hence this "magic number"....

    Re: Porsche AG-VW news, Piech out, WW in!

    Plus, 20% voting rights can be significant if they are in the hands of someone with a "moral" advantage like Wiedeking. He's respected, has powerful influence and can be expected to be backed by the Piech family if he wants to guide VW's growth from the board, which is obviously the point. Porsche has shown skill and sophistication in the last five years in managing cash and assets. They're not making an investment of this size without the expectation of a return that far exceeds their hedge funds.

    VW topped European manufacturers (See Automotive News home page) for 2005 in performance in Europe. They've invested in new plants in Eastern Europe and, with better management, are likely to grow.

    I think it's an interesting time to buy a few shares of stock of both companies.



    D.

    Re: Porsche AG-VW news, Piech out, WW in!


    I totally agree, no need to shoot for 51% to control a company, with 20% Porsche will get a significant influence over VW.

    Their track record is impressive enough to make sure VW's management will listen to their advices.

    VW is just in the middle of a massive cost cutting plan that should yield to a very strong recovery in margin terms ...

    Porsche will benefit from cost sharing, share price appreciation (which is highly likely over the next decade for example) and the dividend stream... The bottom line they believe they will get at least 15% return on their investment ( Euro 3.5bn) over the medium term.

    I wouldn't buy the 2 shares, I would just buy Porsche because I get exposure to both companies in one shot.

    Re: Porsche AG-VW news, Piech out, WW in!

    Quote:
    EricAlain said:

    Porsche will benefit from cost sharing



    I bet they will, I just hope they'll keep a close eye on quality too. I'm just curious to see where Lamborghini development will move to, it may get pretty interesting over the next few years. Believe it or not but I can't help it, I get the feeling that the new 997 Turbo isn't more powerful because of the Gallardo SE, the upcoming Gallardo facelift and of course the rumored Murcielago facelift.

    Re: Porsche AG-VW news, Piech out, WW in!

    Quote:
    EricAlain said:

    I totally agree, no need to shoot for 51% to control a company, with 20% Porsche will get a significant influence over VW.

    Their track record is impressive enough to make sure VW's management will listen to their advices.

    VW is just in the middle of a massive cost cutting plan that should yield to a very strong recovery in margin terms ...

    Porsche will benefit from cost sharing, share price appreciation (which is highly likely over the next decade for example) and the dividend stream... The bottom line they believe they will get at least 15% return on their investment ( Euro 3.5bn) over the medium term.

    I wouldn't buy the 2 shares, I would just buy Porsche because I get exposure to both companies in one shot.



    This is not about voting control. It is about business decisions, products and future plans. Essential you have two outsiders with interests in a competitor company learning about the company strategy, future products and plans to compete in the market place.

    Don't you find that a conflict of interest and somewhat unethical?

    Re: Porsche AG-VW news, Piech out, WW in!

    Quote:
    nberry said:


    This is not about voting control. It is about business decisions, products and future plans. Essential you have outsiders with interests in a competitor company learning about the company strategy, future products and plans to compete in the market place.

    Don't you find that a conflict of interest and somewhat unethical?



    You mean like Apple's Steve Jobs sitting on Disney's board once " his " animation firm Pixar is purchased by them ?

    Re: Porsche AG-VW news, Piech out, WW in!


    Product overlap is on less than 3% of VW products :

    - Boxster-Cayman / Audi TT
    - Cayenne / Touareg / Audi Q7
    - Panamera / Audi A8 (I'm not sure of this one)/ Bentley Continental GT
    - 911 / Lambo Gallardo (may be 911 TT)

    So if Porsche can help VW on 97% of the model line-up it's fine. On the remaining 3%, I'm not convinced it's really a big deal....

    Lamborghini (overall) is less than 3,000 units per year and Bentley (overall) less than 10,000 units .... both of them aren't profitable !!!!

    Re: Porsche AG-VW news, Piech out, WW in!

    Quote:
    EricAlain said:

    Product overlap is on less than 3% of VW products :

    - Boxster-Cayman / Audi TT
    - Cayenne / Touareg / Audi Q7
    - Panamera / Audi A8 (I'm not sure of this one)/ Bentley Continental GT
    - 911 / Lambo Gallardo (may be 911 TT)

    So if Porsche can help VW on 97% of the model line-up it's fine. On the remaining 3%, I'm not convinced it's really a big deal....

    Lamborghini (overall) is less than 3,000 units per year and Bentley (overall) less than 10,000 units .... both of them aren't profitable !!!!


    I agree with Eric, just think of the fringe benefits to the real gear head. We can get some great options on some great sports cars. This technology transfer, if it happens, could give us some great sports car to choose from.

    Re: Porsche AG-VW news, Piech out, WW in!

    Quote:
    nberry said:
    This is not about voting control. It is about business decisions, products and future plans. Essential you have two outsiders with interests in a competitor company learning about the company strategy, future products and plans to compete in the market place.





    Exactly right - although (from VW's perspective) there's not a big overlap in terms of product portfolio. Lambos priced against upper range 997's and mainly competing against Ferrari , and Touaregs priced against the lower range V6 Cayennes are accounting for a minor fraction of consolidated VW-sales only.

    From Porsche's point of view it looks different though: as a relatively small manufacturer they don't wish VW to gain marketshare (with existing OR future products) in Porsche's "niche" - here is the inherent conflict of interest IMO.

    Though I don't think that the upcoming 997 TT has been affected by such conflict of interest already (timing) the future development of both manufacturers will be influenced by Porsche's shareholding in VW for sure. I would be astonished if for example Lamborghini would create a model-line in the 100k Euro segment in the future or vice versa if Porsche would try to uplift the bulk of it's 997-line towards Lambo's price- and HP-range. Having said that I would not have expected such steps from Lambo or Porsche anyway due to the present market conditions (fear of cannibalising each other's margins rather than gaining more customers for the entire market segment).

    An interesting comment came just some days ago from VW's CEO stating that for a mass producer like VW it's not a clever strategy to seek relief from margin pressure in the bread and butter business by trying to diversify into the luxury car niche market...(I would like to know whether this statement has been discussed with Mr. Piech before)

    As for Nicks question about ethics: what do you expect if patriarch/family business meets (mainly) state-owned business ?

    PS: did not see Eric's and Dan's post before typing my own post - I fully agree

    Re: Porsche AG-VW news, Piech out, WW in!

    Quote:
    EricAlain said:

    Product overlap is on less than 3% of VW products :

    - Boxster-Cayman / Audi TT
    - Cayenne / Touareg / Audi Q7
    - Panamera / Audi A8 (I'm not sure of this one)/ Bentley Continental GT
    - 911 / Lambo Gallardo (may be 911 TT)

    So if Porsche can help VW on 97% of the model line-up it's fine. On the remaining 3%, I'm not convinced it's really a big deal....

    Lamborghini (overall) is less than 3,000 units per year and Bentley (overall) less than 10,000 units .... both of them aren't profitable !!!!



    Eric I have no idea if it is 3% but it certainly looks like almost a 100% of Porsche products.

    To sit on a board of directors and influence decisions regarding products is incomprehensible to me.

    For an example,let us assume that VW product design team develops a car which will be very similar to the 997TT but sell for less. Now what do you think the CEO and CFO of Porsche sitting on the VW board would think about that?

    Re: Porsche AG-VW news, Piech out, WW in!

    Quote:
    nberry said:

    For an example,let us assume that VW product design team develops a car which will be very similar to the 997TT but sell for less. Now what do you think the CEO and CFO of Porsche sitting on the VW board would think about that?



    They would have to recuse themselves in any VW board decision that reeks of conflict of interest ... and .. they are SUPPOSED to not use that knowledge in their own Porsche product development ... yeah right . The foxes in the henhouse .

    Re: Porsche AG-VW news, Piech out, WW in!

    Say what you want but 2 votes out of 10 is a losing margin w/o allies and they already had "sharing". Seems like a waste of dough to me.

    Re: Porsche AG-VW news, Piech out, WW in!

    Quote:
    EricAlain said:
    Actually it wasn't Ferrari's heir but Fiat's that went on rehab.

    Concerning Porsche's management seating on a competitor's board, I think it is pretty normal. Porsche is now VW's largest shareholder with 18.5%, slightly ahead of the State of Lower Saxony.

    Porsche has spent Euro 3.5bn to buy this controlling stake I believe they have the right to get an appropriate representation on the board. I also think Porsche will help VW's management to focus on profitability and cash-flow generation rather than embarking on frivolous and ill fated projects such as the Phaeton, Lamborghini, Bentley, Bugatti, ....



    Embarking on frivolous projects is stupid yes but the Bentley GT has been a great success and the revitalising of Lamborghini has gone really well. The first Lamborghini completely built under the eyes of Audi, the Gallardo has been the greatest selling Lamborghini in history in only 2 years of production!
    The Bugatti is only an exercise in showing the engineering might of VW, never was meant to be a money maker.
    On the other side of the coin the Phaeton has been a failure.

    Re: Porsche AG-VW news, Piech out, WW in!


    May the Bentley Continental GT and the new Lambo are great successes ..... on a commercial standpoint, on a financial standpoint it is an absolute failure ....
    All the money that was spent (wasted) to revamp Bentley, Lambo, revive Bugatti wasn't spent on the core business (Golf, Passat, Jetta, Seat, Skoda, ...) hence today's dismal profitability.

    Just to give few examples :
    - Market share loss and tiny losses in China that was once a HUGE contributor to earnings.
    - Euro 1.0bn in North America in 05 after Euro 900m looses in 04.... no break-even before 2007 at the earliest.
    - Poor new product pipeline ...

    So the bottom line as a car enthusiast, I'm super happy to see those fancy cars on the road. As an investor I can be angry after the old management for this blunder.

    Re: Porsche AG-VW news, Piech out, WW in!

    Quote:
    nberry said:
    Quote:
    EricAlain said:

    Product overlap is on less than 3% of VW products :

    - Boxster-Cayman / Audi TT
    - Cayenne / Touareg / Audi Q7
    - Panamera / Audi A8 (I'm not sure of this one)/ Bentley Continental GT
    - 911 / Lambo Gallardo (may be 911 TT)

    So if Porsche can help VW on 97% of the model line-up it's fine. On the remaining 3%, I'm not convinced it's really a big deal....

    Lamborghini (overall) is less than 3,000 units per year and Bentley (overall) less than 10,000 units .... both of them aren't profitable !!!!



    Eric I have no idea if it is 3% but it certainly looks like almost a 100% of Porsche products.

    To sit on a board of directors and influence decisions regarding products is incomprehensible to me.

    For an example,let us assume that VW product design team develops a car which will be very similar to the 997TT but sell for less. Now what do you think the CEO and CFO of Porsche sitting on the VW board would think about that?


    You mean like the new Audi R8 that is coming out?! It is already happening, WW can not stop that. There are still many other board of directors and they are smart enough to see if Porsche were trying something. Look at the mess that Daimler Chrysler is in, it would be better to have someone successful on your board then someone take it over and ruin it.

    jail martha

    Quote:
    nberry said:
    This is not about voting control. It is about business decisions, products and future plans. Essential you have two outsiders with interests in a competitor company learning about the company strategy, future products and plans to compete in the market place.

    Don't you find that a conflict of interest and somewhat unethical?


    nick,

    how long had piech been running vw? you don't think he had the ability to give and get insider info from porsche from the start?
    the companies have long histories together.
    you just want to debate the law.
    yes, it would obviously be a conflict of interest and unethical but it happens all the time.
    do something useful and go put martha stewart back in jail so we dont have to listen to her!

     
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