Well, Tesco is responding. Plans to open more of the giant Tesco Extra stores have been put on the slow burner, and some of its more ‘out there’ ideas have been put on hold.

But here is the snag: Tesco has limited scope to expand in the UK. It is so big now, it is hard to see it grabbing yet more market share, and if it did, the regulators would have something to say about it. The truth is that nothing lasts forever, and Tesco’s magic formula – the one that made it such a big hit – is now commonly understood by its rivals.

But look overseas, and the store still has lots of potential. Research recently published by IGD found that Tesco is the fastest growing of the world’s four largest retailers. It said: “Tesco’s international markets, particularly China, Turkey and India, will be a key element in driving their long-term growth and returns. The company will try to replicate its successful concepts in the UK, such as Express stores and Clubcard rewards scheme, in other countries.”

The US experiment has not been so successful, but then the company was unlucky. After all, it did set up in the US just as the largest economy in the world fell into its worst recession since the 1930s. And actually, given the awful timing, Tesco has managed the US pretty well.

But markets want the company to be more focused, more UK centric, to hone in on its home territory.

And then we wonder why UK companies so rarely grow to become global heavyweights.

Other articles in this series

The mystery of business

Google slams tyranny of quarterly earnings 

Nothing lasts forever 

Tesco’s woe 

It has also been making money so fast that the only shareholders who are not envious are the ones with stakes in Apple. In its last quarter, net earnings at Google were up 60 per cent, hitting $2.89bn.

And yet shareholders are not altogether happy.  Sure, they are still buying shares, and they like the way profits are growing. But they fret. What about focus? What’s all this rubbish about goggles and self-driving cars? For that matter, Google Plus is getting a drubbing at the hands of Facebook. For as long as quarter on quarter profits are shooting up  – unlike rockets from North Korea –  they are holding back on the criticisms. But woe betide Google the day its growth stumbles. That will be the day that its super trio of top management – founders Larry Page and Sergey Brin, and chairman Eric Schmidt – are fired, just like Steve Jobs was back in the 1980s.

Except for one thing. When Google was floated, the shares held by its dynamic trio of managers were afforded ten votes for each share, giving the three wise men 65 per cent control of the company’s voting.

Markets were not happy with that, but they could grin and bear it.

But then last week Google revealed plans for a share split. Each shareholder would get an additional spanking new share for every share they already owned. But wait, you may ask, doesn’t that mean Brin, Page and Schmidt’s voting power will be diminished? You can almost hear institutional investors rubbing their hands together. At last they will have the power to enforce a bit more focus at Google.

But no, the Google boys had already thought of that one. The new shares that are being issued won’t carry any voting rights.

The investment community is up in arms. Saneeta Mandil, from the Cass Business School, said: “The decision of Google to split its shares by creating non-voting shares is a clear violation of the one share one vote practice and a dent in the firm’s corporate governance image. This decision appears to be clearly driven by the desire of the founders to strengthen their voting rights and to reduce shareholder activism. A major question raised by this case is how can the founders Larry Page and Sergey Brin can get away with it? The answer is because Google is generating very good returns. In general shareholders raise their concerns only when firms are underperforming. When they do well, anything goes!”

But can Google get away with it? A statement issued by the company went like this: “Given that Larry, Sergey, and Eric control the majority of voting power and support this proposal, we expect it to pass.”

So how can Google justify such a move? “We have put our hearts into Google and hope to do so for many more years to come…We want to ensure that our corporate structure can sustain these efforts and our desire to improve the world.”

It may smack of tyranny of the few over the rights of shareholders. It smacks of a blow against the shareholder democracy. But then again, maybe it is also a blow against the tyranny of quarterly earnings.

Other articles in this series

The mystery of business

Google slams tyranny of quarterly earnings 

Nothing lasts forever 

Tesco’s woe 

The US Trade Department reacted by saying that the report would actually confirm that “European subsidies to Airbus dwarf any subsidies that the United States provided to Boeing”. This statement refers to an earlier 2010 ruling which Boeing accused Airbus of receiving $20bn in illegal subsidies.

The Yanks may have a point because if you average out $5bn over the last few decades this only comes to the price of one large body aircraft per year. This is hardy enough money to do any serious research and development.

This latest WTO dispute is the largest in its history. The arguments go back 6 years and have their foundation in an old 1992 trade agreement that was abandoned by the US Government. There is everything to fight for as the aircraft market is worth $1.7 trillion. In recent years the fight has become tougher as new Chinese and Brazilian aircraft have started to compete in this market.

There is also a wider impact of this dispute. The WTO will release its official findings in a few weeks, around the same time as the US Air Force are going to decide on who will win the $25-50bn contract for refuelling tanker planes. Both Airbus and Boeing have their political allies but the report may shine a negative light on just how Airbus have been able to undercut competitors in the US market. Image from Smarter air charter

In the last four months of 2010, Apple’s profits came in at $6bn, 78 per cent up on the year before. Google’s profits were $2.54bn, around 28 per cent up on a year ago. Goldman Sachs’ profits were $2.39bn, down 53 per cent on a year ago.

The problem for the bank is that profits have been falling for three quarters in a row. It put the disappointing results down to “low client activity levels”. Three different theories are doing the rounds at the moment to explain the poor results from Goldman. Number one: its clients are worried about uncertainties in currency, bond and commodity markets. Number two: its staff are overpaid – the average pay per employee at the bank is $431,000, although presumably some employees make a good deal more, most a good deal less. The third theory is that the bank is not sufficiently diversified and is suffering from its lack of a retail arm.

An article in Rolling Stone magazine once described the bank as a “giant vampire squid wrapped around the face of humanity relentlessly jamming its blood funnels into anything that smells like money”. Well, maybe its clients have been busy ripping out the bank’s blood funnels.

But here is another piece of irony for you. The ‘dotcom produce vapourware’ row is still raging. Earlier in the week, the man standing in for Steve Jobs at Apple said of Google’s plans in the Android arena that: “They lack performance specs, they lack prices, they lack timing, and so today they’re vapour.”

Google responded by saying that it is activating 300,000 Android products a day. So, as vapourware goes, that seems pretty solid. Google’s co-founder Sergey Brin couldn’t let the comments from Apple’s acting boss go without some kind of response, however. He said that the company is working on other projects but he won’t go into details lest he is accused of peddling vapourware.

Goldman Sachs said of its profits that they were “financially humbling”, but still managed to fork out $15.4bn in compensation and bonuses. Mind you, Google has upped wages for its 24,000 workers by 10 per cent.

Looking forward, the battle between Google and Apple boils down to a battle of philosophy. It’s a contest between Apple’s proprietary software, and Google’s Linux-based open standards.

Meanwhile, the famous bank is left philosophising on why it’s so unpopular, and how it has somehow managed to swap roles with the two giant techs in the production of vapour.

Revenue in the final quarter of 2010 came in at $26.74bn, up 70 per cent on last year’s impressive figures. Profits grew by 78 per cent, hitting $6bn (I remember the day when Apple barely made profits over $1bn – ed.) (And I remember the day when Apple was making a loss – ed’s father.)

The halo effect is working nicely, and sales of Macs rose 23 per cent, hitting 4.13 million. (The halo effect is supposed to describe this phenomenon in which people are so chuffed with their iPod or iPad that they migrate from a PC to a Mac.)

Sales of iPhones soared 86 per cent, hitting 16.24 million. (I was sitting on the train the other day, and noticed everyone I could see without bending my neck had an iPhone in their hand and was busy playing with it – ed.) (And I remember the day when people used their mobiles just to make phone calls – ed’s father, again.)

As for the iPad, things are getting ridiculous. The company sold no less than 7.3 million in the final quarter of 2010, and in terms of increase on the previous year that means sales rose by … err, infinity – because the iPad did not exist at the end of 2009.

So are iPad sales eating into PC sales? This is what Tim Cook, Apple’s chief operating officer said: “Was there any cannibalization by iPad…Honestly, I don’t know for sure. But yes, I think there is some cannibalization.” He added: “If this is cannibalization, it feels pretty good.”

And yet, at the beginning of the week, fears related to the health of Apple’s famous boss Steve Jobs.

Steve Jobs has worked miracles for Apple (I remember when Apple fired him – Ed’s grandfather), but is he still crucial to the company?

In his book Them and Us, written by Will Hutton (that’s a coincidence, I am reading that book at the moment – Ed), the author quotes Michael Hawley, a professional pianist and a computer scientist who once worked for Jobs. “As special as Steve [Jobs] is, I think of Apple as like a great jazz orchestra. Steve did a superb job of recruiting a broad and deep talent base. When a group gets to that size, the conductor’s job is pretty nominal – mainly attracting new talent and helping maintain the tempo, adding bits of energy here and there.”

Hutton was making a point about executive pay, and suggesting that even the brilliant Jobs is probably less important to Apple than is commonly realised.

Jobs of course played a crucial role for Apple. He was after all the co-founder, and when he returned to the company it was he who led the way into the brave new world of the iPod. In the wilderness year, between the Jobs sacking and return, Apple limped forward from one bad decision after another.

But now Jobs has fixed the culture at Apple. And the latest thinking in network theory says that it is not a company’s boss that really counts, it is the network of people who make it up, and corporate culture. The boss can do little more than influence this. Of course, Lord Browne helped steer the culture at BP towards cost cutting, and Tony Hayward was unable to change that culture sufficiently fast to avoid disaster.

Like most readers here, we wish Steve Jobs the best, and hope he recovers fully and quickly. But Apple is no longer a one-man band. And no doubt Jobs will be delighted to know that.

We still maintain our long-term doubts about Apple, however, whose culture seems to lean towards proprietary technology, and stands for the complete opposite of open standards and inter-company cooperation that seem to be the way things are going. (You young ones and your new-fangled ideas – Ed’s great grandfather.)

Mind you, it is debateable whether Mikhail Khodorkovsky is getting such good sleep. He is the fellow who was once the richest man in Russia, headed Yukos, had ideas about a career in politics, but ended up serving time at the pleasure of the Russian government.

Of course, he was completely in the wrong, and when he says BP must beware, they have just given five per cent of their company away to a business that has illegally obtained most of its assets from Yukos, he is just expressing sour grapes.

One might wonder how much sleep BP’s boss Bob Dudley got a few years ago, when he found his passport was no longer appropriate for his stay in Russia.

It was all a misunderstanding, and BP and its partner in Russia, Rosneft, are the best of friends.

Still, at least Tony Hayward is no doubt sleeping like a baby now he has got his life back. You will recall he was the top man at BP, or was that British Petroleum, when he ran into a few difficulties in the Gulf of Mexico.

Of course, BP was owned by those same oppressors who once ruled the US, and were kicked out during the American Revolution.

But actually, it appears it is not like that at all.

Ed Markey, top Democrat, used to love BP, or British Petroleum as he likes to call it. The firm brings back memories of the United States’ loyal ally. But now he says: “BP once stood for British Petroleum. With this deal, it now stands for Bolshoi Petroleum.”

But actually, Mr Markey made a more astute remark. He said: “Even following the largest oil spill in US history, and potentially billions of dollars in fines still outstanding, the Russian Bear is apparently bullish about BP. This acquisition will almost certainly complicate the politics of levying and collecting damages from BP following their Gulf of Mexico oil spill.”

So why do you think Russia is bullish about BP? How about this for a theory: because it reckons BP’s expertise in drilling for oil in out-of-the-way places, such as deep beneath the seabed in the Gulf of Mexico, or beneath the ocean in the Arctic, leads the world.

The know-how the company employed in fixing the Deep Horizon leak was truly breathtaking – and the company’s solution was a good deal more sensible than some of the ideas, including using a nuclear bomb to fix the leak, suggested by its critics.

BP has rushed into the arms of the bear, because its Uncle Sam’s arms were so unwelcoming.

Of course doubts still remain. Sure, BP may well do very nicely out of the Russian deal – although it is high risk – but the other BP, British Pensioners, may have something to cheer about.

The numbers speak for themselves. Revenue was up 8 per cent in Q4 from a year ago, hitting $11.5 billion. More to the point, quarterly net profits were $3.4 billion, no less than 48 per cent up on the same quarter last year.

For the year, revenue was $43.6 billion, operating income $15.9 billion and net income $11.7 billion.

Its boss, Paul Otellini, didn’t mince his words. “2010 was the best year in Intel’s history, we believe that 2011 will be even better,” he said.

But all this at a time when its sales of PC chips are struggling.

As far as the PC market is concerned, Intel faces two major hurdles. First of all, PCs themselves are struggling against competition from the iPad and other tablets. Recent figures out from both Gartner and IDC indicated that while PC sales are still rising, the increase is falling behind estimates. And it seems games console and iPad sales are encroaching on territory once dominated by the PC.

But, as we said yesterday, this trend is surely set to increase. Time was when we used our computer as a word processor and for spreadsheets, and all the other features were like an added extra. Now we use our computer to view video, listen to music, socialise via Facebook or a similar tool, and maybe even to read books. Word processing and spreadsheets are like an added extra. And that means a big challenge for both Microsoft and the virtual duopoly of PC chip suppliers: Intel and AMD.

Intel’s second hurdle relates to recent moves Microsoft has been making towards other chip companies. A few days ago, Microsoft announced that the next version of Windows will support ARM-based processors. ARM, the UK-based chip design company, has been a big hit with manufacturers of handheld products for quite a while. ARM licenses its design on to chip manufacturers. All in all, this has made the company most appealing to investors, giving it a forward p/e ratio of 90.

But the tie up with Microsoft is a real shot in the … excuse the pun, arm for the company.

But one assumes Intel is not too happy.

Maybe in a few years’ time the ads for PCs will say: ‘ARM inside.’

Not that Mr Otellini was having any of that talk. He said at a press conference this week: “Many of you have asked us questions about how we will compete with ARM in the new segments of mobile computing. Our answer is very simple: as we have done for decades in the traditional computing markets, we will apply the world’s most advanced silicon transistor technology to these new segments to deliver the lowest-power, highest-performance, lowest-cost products on the planet.”

He concluded: “When these chips are combined with our support for the world’s leading operating systems, our proven ability to create broad ecosystem support, and our growing software capabilities, I’m confident we will be very successful in these segments.”

So that’s the threat; the migration away from Windows, and Windows migration away from Intel dominance.

But here’s the good news. As more of us use our mobile phone or tablets as a link to the Internet, and we watch more video streams, we socialise more on Facebook, etcetera, we use up more processing power at the server end. If Google has its way, then our word processing and spreadsheets will be done via a server, too. So that trend may not be good for a company that relies on selling chips for traditional PCs, but it is good for companies that sell chips for servers.

And of course Intel sells chips for servers, too. And now it’s selling lots of them. That’s where the rise in profits is coming from. And the margin is better on servers too, hence the big jump in profits from a much smaller rise in revenue.

Besides, even at the user end, things are not quite so bleak. Sure, the PC market may be under threat, but the market for computer devices of some sort is growing, and that has to be good news for any chip company. The dream of a PC on every desk has been replaced by the dream of a computer in pockets, and purses, and in kitchens and beside beds.

And yet, change is difficult. Intel has done superbly well to grow when its traditional market seemed close to peaking. But can this run continue? The world of technology is now moving so fast that the mighty can be reduced to quivering wrecks in hardly any time at all.

And can Intel keep changing with the times? Maybe one day it will misread the runes, and that’s when the story of Intel will become truly interesting.

According to IDC, the world saw an additional 2.7 per cent of PCs shipped in Q4, much less than the 5.5 per cent expected. But tablet sales soared.

Gartner told a similar story, saying growth had slowed to 3.1 per cent from the 4.8 per cent previously expected.

The FT quoted Mikako Kitagawa, an analyst at Gartner as saying: “Media tablets such as the iPad, as well as other consumer electronic devices such as game consoles, all competed against PCs.”

But the point is, the iPad story has only just begun. Other tablets using the Google Android system are set to follow.

Here is a question for you. Given that PCs double in speed every 18 months, why are they as slow and as unreliable as ever?

Every time Microsoft upgrades its version of windows, the PC it runs on seems to slow down.

We are all used to the Windows-type environment, but in contrast to tablets, the PC is looking mighty old-fashioned now.

And in any case, as people start getting used to the iPad operating system, or the Linux operating system, on mobiles and tablets, is it not inevitable that they will start demanding a similar system for their desktop.

Time was when we used our computer as a word processor and for spreadsheets, and all the other features were like an added extra.

Now we use our computer to view video, listen to music, socialise via Facebook or a similar tool, and maybe even to read books. Word processing and spreadsheets are like an added extra.

Microsoft has got its work cut out, all right.

Paper: when you are reading, whatever it is, do you prefer it to be written down on paper, or are you happy to read off a screen? Well, it seems your preference is irrelevant, the move away from paper is unstoppable. And now private investors find themselves on the centre stage as company reports get caught up in the electronic tide.

Last week the Financial Reporting Council recommended removing the legal requirement for companies to publish their annual reports in hard copy form. It wants to see the money saved from the move used to improve transparency.
But the UK Shareholders Association, or UKSA, is hopping mad. Its Director Eric Chaytor said: “It is not just the small investors who don’t use the internet who will be affected. Plenty who are online still like to read the report in paper and bring it to the annual meeting as a reference.”

And of course he is right. The move away from paper is inconvenient.

But the inconvenient truth is that the benefits of electronic publishing are so overwhelming, that nothing can stop the trend. Publishing electronically is simply much, much cheaper than traditional publishing.

But at the moment we are at a kind of half-way house. Marketing departments would love to scrap all paper based promotions and go electronic because of the enormous cost savings. But we all are inundated with email. These days, a paper mail shot seems so much more compelling than yet another email, amongst hundreds, no doubt sent straight to our spam box.

As for paper magazines, they feel and smell good, but will they go electronic, too? It is surely only a matter of time before we have versions of Kindle-type products that provide magazines. Or maybe we won’t need them, and instead websites will replace all magazines.

At the moment there is still resistance to the idea, but the cost savings will win through. Not many of us like call centres; it’s nigh on impossible to ring our local bank branch these days, but customer satisfaction has come second to the overwhelming cost savings.

It will be like that in the migration from paper to electronic, too. It is possible that the final switch to exclusive electronic publishing will wait until the Facebook generation are a little older. But we suspect not.

The key may ultimately prove to be the hardware. Already we can use our iPhones, Androids or iPads to view company reports while at annual meetings.
The future of company reports printed on expensive appear in beautifully bound binders, is surely very short indeed.

Ford chose an unusual place to reveal its latest electric car: the Consumer Electronics Show in Las Vegas, the exhibition that is normally used to unveil new video games or 3D TVs.

But then again, this car seems to be almost as much computer as it is vehicle.

Here are some of its applications: the car links with your mobile phone and can tell you where the nearest charging station is – that’s handy. You can use your phone to open the car – that’s quite cool. And if you want to save money, it can determine the cheapest time to recharge your car. So if you have left it charging, and told the computer when you need the vehicle again, it will automatically only charge the vehicle up when electricity is at its cheapest.

But supposing you do something idiotic, such as not plugging it in properly. Well, you will get an alert on your phone. Another piece of software can show you where you are, relative to your car.

There are a few things the new car app can’t do. For one thing it doesn’t text you messages of love – a real blow for many people who are in love with their cars. It would be nice if their affection could be reciprocated with the odd text message from their Ford cooing: “Hello, darling, can’t wait to feel your bottom on my leather.” Neither can the new Ford drive itself.

But surely the big missed opportunity is applying the technology to odd socks. Now, if your mobile phone could tell you where your missing socks are, that really would be useful.