Knowing and Making

Robert Peston writes an entertaining, slightly scary, story about BT's pension liabilities . But is this anything to worry about? Not really. He makes a few points that sound striking, but under closer examination are utterly unsurprising. ...in an economic sense, BT's current and future pensioners own this totemic business. True, but any business is "owned" both by its creditors and its shareholders. The creditors always have to be paid off first before the shareholders have clear title to the company's assets. And in most large, old companies, pensioners are among the biggest creditors. Look at General Motors, which has just handed over a majority stake in itself to its pensioners (via their union, the UAW). To put this £8bn chasm in its pension-scheme into an appropriate context, the entire market value of the company is less than £10bn. Also true, but meaningless. The pension deficit - like any other debt that BT has - is already factored into its market value...

When an industry sector is immature, nobody knows what the right divisions are between companies. The technology sector has clearly gone through many iterations of asking itself this question: hardware and software used to be provided as part of the same package, but now they are almost completely separate. Internet access, hosting, web design, domain registration and software development used to overlap (at Inon we provided all of these services in the late 1990s) but now it's rare to see someone offering more than one or two of these. There are roles for integrators, but the integrator usually subcontracts a large share of project revenue (60-80%) to third party specialists and retain only the consultancy element in-house. So is it time for BT to sell Global Services? Robert Peston has an analysis of their losses today, and it doesn't look good. Ten years ago most customers didn't really understand the Internet, and how it related to existing software, hardware and commu...