How The Government Can Interfere With Company Mergers - The MicroHoo Example

Governments are taking active roles in the world of commerce. As mergers and economic situations occur left and right, the governments of the world feel the need to control and/ or at least review these major changes and how it might effect the economy as a whole. The New York Times article below accounts the possibility of Chinese law impeding on Microsoft's attempt to take over Yahoo. Read on...

Microsoft’s hostile-takeover attempt against Yahoo may encounter an unexpected hurdle in August after a Chinese antimonopoly law takes effect that will extend the nation’s economic influence far beyond its borders.

The law, which goes into effect on Aug. 1, is intended to strengthen an existing set of antitrust regulations the Chinese originally established in 1993. It will make China a third sphere of regulatory influence, matching the power of the European Union and the United States, according to legal specialists in this country and in China who have studied it.

Formally enacted by the National People’s Congress last year, the measure gives Chinese regulators authority to examine foreign mergers when they involve acquisitions of Chinese companies or foreign businesses investing in Chinese companies’ operations. Beijing could also consider national security issues, according to a report by the official news agency Xinhua.

The law could give China influence in Microsoft’s courtship of Yahoo because in August 2005, Yahoo, a premier search portal, invested $1 billion in Alibaba.com, China’s largest e-commerce business. The investment gave Yahoo about a 40 percent stake in the Chinese company. Alibaba officials have said they believe that a Microsoft takeover of Yahoo would set in motion a buyback provision, making it possible for them to gain independence from Microsoft.

Nathan G. Bush, an antitrust law specialist with O’Melveny & Myers in Beijing, said the law represented the ascendance of China “as another regulatory capital contending for influence with Brussels and Washington.”

“Multinational corporations will need to develop strategies for all the markets they operate in,” he added, “and China is a big market.”

Whether China would seek to review a Microsoft acquisition, and what kind of posture it might take, would be closely watched by regulators and global companies as an indication whether it will play a conciliatory or a nationalistic role on the world stage.

“I don’t think anyone has worked through the issue of where an Internet merger should be reviewed, given that it truly is a World Wide Web,” said Andrew I. Gavil, a law professor at Howard University.

There are potentially dozens of jurisdictions that could claim oversight in such a deal because of the global business interests of the two huge companies and because it could potentially transform the Internet into two megaportals, Google and Microsoft. Other parts of the world that might have an active interest in the outcome of a merger include South Korea, a vibrant Internet economy where an antitrust investigation into Microsoft was previously opened.

Executives at Microsoft and Yahoo declined to comment on the possible effect of the new Chinese law. In rejecting Microsoft’s takeover bid in January, Yahoo’s chief executive, Jerry Yang, said in a letter to employees that the offer substantially undervalued the company, in part because of the significant growth potential of the Alibaba business in China.

The issue of whether the Beijing authorities will harmonize the law with foreign antitrust laws or use it to fire a shot across the bow of global businesses was sharpened last week after an effort by Huawei Technologies to invest in 3Com collapsed in the face of national security concerns in Washington.

The Committee on Foreign Investment in the United States had examined the purchase, through which Huawei would have gained a stake in 3Com. The American company’s Tipping Point subsidiary makes Internet intrusion-detection software, a technology that the United States maintains has national security implications.

Before the attempted investment fell apart, senior Chinese officials were quoted as saying they thought that the deal did not have national security implications, and that American regulatory efforts were a cover for protectionist trade practices.

National security has played a role in other attempted deals involving Chinese companies. In 2005, the Chinese National Offshore Oil Corporation made a high bid to acquire Unocal, leading to a vote in the House of Representatives to block the deal. Soon afterward, the Chinese company, known as Cnooc, withdrew its bid and Unocal was acquired by Chevron.

In the case of the proposed Microsoft-Yahoo transaction, the Chinese have in recent years become more and more alert to the role the Internet plays in their economic and political affairs.

Last week, a vice minister in the State Council Information Office, which oversees the Internet, said there were 230 million Chinese users of the Internet. He said the Internet sector accounted for 7 percent of the country’s gross domestic product, and he expected that to rise to 15 percent in three to four years, according to a Reuters report.

The official, Cai Mingzhao, warned that foreigners should not use the Internet to interfere in Chinese internal matters, according to a report in The Guardian.

Even if the Chinese government did not try to prevent a takeover by Microsoft, a prolonged review could substantially damage the value of the business, a number of Internet industry executives said.

Want To Start Your Own Business? Why Not Start Online?

From the article, Start a Web business in an extra few minutes By Anupreeta Das taken from Reuters. The sample highlighted here is Zlio.com where you can make your own store and this is their story.


When David Pangelinan isn't logging 14-hour days driving a fuel tanker, he's at his computer indulging his latest hobby: building a succession of online stores in minutes.

Pangelinan has built four online stores offering hundreds of products for sale, from Bulova watches to Betty Boop pillows, using the Web site Zlio.com.

"It was real easy," said Pangelinan, 43, who lives in Columbus, Georgia.

Pangelinan said he's still learning the finer points of e-commerce, and spends time browsing through thousands of products on Zlio.com's catalogue that he could sell.

"I just went in there and started jotting down the products that were interesting and caught my eye," said Pangelinan, who spends six to 10 hours a week tending to his shops.

Zlio.com, which launched in France in 2006 and in January in the United States, allows people to form online stores for free. Users can choose a name, address and template for the store they want to create and then begin displaying wares, say an iPod or a T-shirt.

It's a simple tool, with none of the typical hassle of designing a site, setting up a payment gateway and keeping stock of merchandise and shipping.

Once signed up, a new shopkeeper can choose from more than 3 million products offered by 120 merchants, including Barnes & Noble Inc, Zappos, Gap Inc and Apple Inc. They can then invite friends and relatives to shop.

"It's the Tupperware party concept gone online," said Zlio.com founder and Chief Executive Jeremie Berrebi. "But people are defining the concept of the shop."

Berrebi, an Internet journalist-turned-entrepreneur, said he meshed the idea of a Tupperware party with social recommendation features in which users turn to friends for shopping suggestions to create Zlio.

The notion of helping people create online stores is nearly as old as the commercial Web itself. Major e-commerce players eBay Inc and Amazon.com Inc have helped Web entrepreneurs set up hundreds of thousands of independent online stores.

Sites such as CafePress.com have been around since 1999, allowing Web users to create stores to sell personalized accessories like coffee mugs. Zlio offers a far wider range of goods for sale and takes more of a social networking approach.

Zlio also provides some marketing help. They can put a widget on their Facebook or other social networking page, or use Google Inc's AdSense software to direct traffic to their sites.

So far, people have created more than 250,000 stores, many organized around themes. One was devoted to all things red, another sold only hot sauce, a third focuses on The Beatles.

John Holsen, who runs a small publishing business in Kansas City, Missouri, recently started a shop with his wife, a yoga teacher, to sell yoga gear.

"It started as an experiment to see if I could build an e-commerce site in five minutes," Holsen said. "And you can."

He said his site gets up to 5,000 hits a month and makes about $300-$400 on monthly revenue of $3,000. "You won't get wealthy off of it, but if you built enough sites, you can probably make a decent income," he said.

On average, shopkeepers make about $300 a month, but top sellers can make as much as $3,000, Zlio spokeswoman Rachel Bremer said.

Merchants share the revenue with Zlio and the seller based on the number of clicks and sales. Shopkeepers display wares and can earn up to 10 percent commission through eBay's PayPal online payment service, either on every sale or on every click generated. They don't have to worry about shipping orders because the companies take care of it.

Last year, Zlio generated $12 million in sales for the companies with which it has tie-ups, Berrebi said. He refused to disclose how much money the site makes. He also has seen some business interest in the site. Mangrove Capital, which was an early investor in eBay's popular Skype Internet phone service, is backing Zlio, too.

As for the name Zlio itself, Berrebi said it doesn't mean anything. "It's just a four-letter word."

From Reuters via Yahoo News

Google Has The Business Model To Beat -- Sucking The Life Out of Competitors And Old Meda

Henry Blodget, a Wall Street analyst during the dot-com heyday who now runs Silicon Alley Insider, published a report Friday that examines Google's advertising growth in 2007 against those of 17 online and traditional media rivals, including Yahoo, Microsoft, Time Warner, Disney, Viacom, CBS, and Clear Channel.

From the story:

"The year-over-year growth of revenue (in 2007) on Google.com (U.S.)--approximately $2 billion--was more than twice as much the growth of ad revenue in all of the offline media companies in this sample combined. This is such an amazing fact that it bears repeating: A single media property, Google.com (US), grew by $2 billion. All the offline media properties owned by the 13 offline media companies above, meanwhile--all of them--grew by about $1 billion."

Here are the statistics on Google's growth

• Total US ad revenue across all 17 companies grew 9% from 2006 to 2007, from $53 billion to $58 billion

• Online ad revenue grew 28%, from $14 billion to $18 billion.

• Offline grew only 3%, from $39.5 billion to 40.6 billion. This was helped significantly by the inclusion of affiliate fees and (and global revenue) at CBS, Viacom, and News Corp.

• Online ad revenue grew by $4 billion.

• Offline ad revenue--in all other media--grew by $1 billion.

So advertising revenue is flowing online at a frantic rate. That's the whole story? No. Let's look at how that online revenue breaks down.

• Online ad revenue grew 28%, or $4 billion.

• Online ad revenue at Google grew 44%, or $2.7 billion.

• Online ad revenue at Yahoo, Microsoft, and AOL grew only 15%, or $1.3 billion.

• Google captured 2X as much revenue as its closest three competitors combined.

The confirms it, Google has got the business model to beat at this point. Because right now Google is sucking the life out of old media and greatly shifting ad spend towards its direction.

Bebo Goes To AOL For $850 Million - What Now?

AOL will pay $850 million to acquire global social networking site Bebo.com in an all-cash deal announced Thursday through an article from CNN Money.

With 40 million members, Bebo's audience lags Facebook and MySpace in the United States, but it vies for the top spot in the United Kingdom and has a fast-growing global audience.

"Bebo is the perfect complement to AOL's personal communications network and puts us in a leading position in social media," said AOL chief executive Randy Falco.

AOL hopes to leverage its advertising sales business across Bebo's network. Time Warner owns AOL and Fortune.

Bebo will be the cornerstone to AOL's social media strategy. When integrated with instant messaging services ICQ and AIM, it is expected to reach 80 million members.

Started in 2005 by San Francisco programmers Michael and Xochi Birch, the company has approximately 100 employees.

Bebo's site looks a lot like MySpace with a cleaner interface. It has been a pioneer in combining professionally produced entertainment and user-generated content with programs like KateModern.

The show's title character, Kate Modern (whose name is a play on the famous British museum, the Tate Modern), is a waifish art student trying to make it in London. She and her friends record and post short video diaries and chat with viewers. Her popularity is one reason why Bebo's 40 million members spend an average 33 minutes on the site. Another reason is that with the launch of its open media platform in the fall, Bebo plays host to content from old media companies like CBS Beand MTV.

The deal comes just one week after AOL launched Open AIM 2.0, which allows developers greater freedom to develop for the AIM network and integrate AIM into its sites and applications.

Bebo has a number of pre-existing deals with AOL competitors. In September the site announced a partnership with Yahoo to sell the site's display ads in Britain and Ireland and to integrate Yahoo! Answers with Bebo's site. That followed a Microsoft partnership that let members IM with anyone - Bebo friend or not - on Windows Live Messenger. Shields declined to comment on what will happen to those deals.

There is much debate over how to monetize social media. Relying on advertising has thus far proven disappointing. In a March 9 interview at SXSW, Facebook ceo Mark Zuckerberg said his company, which is valued at $15 billion, was close to breaking even - another way of saying that it is not yet profitable. And Google's $900 million ad deal with MySpace isn't generating the return the company expected.

Instead, companies are looking to profit off of the applications that live atop those platforms. "We used to look at social network sites like we would any ad-supported sites, like the NYTimes," said Google's president of advertising Tim Armstrong at a Bear Sterns media conference on March 10. "Now we think differently. We look at social networks as a platform and see an opportunity to monetize widgets and social network applications."

In a best case scenario, Bebo will now be able to leverage the behavioral targeting capabilities from AOL's Platform A to better target certain demographics, and it will be able to scale to reach a larger audience with AIM. But AOL has not proven itself able to integrate acquisitions well so far. It has been on an acquisitions tear, putting down more than a billion dollars in the last few years for online advertising companies Advertising.com and Tacoda. But its unclear how well these properties work together, and recently the company lost Tacoda founder Dave Morgan and let go Platform A President Curt Viebranz.

Even Facebook's CEO Mark Zuckerberg Needs Help When It Comes To Growth Online

As this Wall Street Journal article suggests, even multi-million dollar Facebook needs help every now and then. Read on to learn Facebook's struggle for growth online.

Mark Zuckerberg, Facebook Inc.'s 23-year-old chief executive, is finding that he and his company have to grow up at Internet speed. The latest sign: He has poached a top Google Inc. executive, Sheryl Sandberg, to help expand his social-networking company.

Sheryl Sandberg

Ms. Sandberg, a six-year Google veteran who has been the search giant's vice president of global online sales and operations, will become Facebook's chief operating officer. In that role, the 38-year-old executive will try to help expand the privately held company's operations, revenue and international reach. She will also lead sales, business development, public policy and communication. Ms. Sandberg will report directly to Mr. Zuckerberg, who has been searching for a second-in-command for several months.

Ms. Sandberg's appointment comes as Mr. Zuckerberg is trying to adjust to being head of a company that is quickly outgrowing its position as one of Silicon Valley's hottest startups while preparing himself to be able to lead it to Google-like international heft. Based in Palo Alto, Calif., Facebook is a social-networking site that allows users to create personal Web pages and communicate with one another.

It has grown fast in the four years since Mr. Zuckerberg founded it. Sales reached $150 million in 2007, but the company's operations are concentrated in the U.S., and it is still burning up more cash than it is generating in revenue, according to a person familiar with the company's finances. Facebook declines to comment on its performance.

In early December, the CEO had a conversation with one of his mentors, Silicon Valley investor Roger McNamee, in which he admitted he was having a tough time with some new pressures he was facing as chief. "Is being a CEO always this hard?" he asked, according to Mr. McNamee, a managing director at private-equity firm Elevation Partners who has a personal stake in Facebook.

In an interview, Mr. Zuckerberg says he doesn't recall the specific conversation with Mr. McNamee, but acknowledges the CEO job "is hard -- I do sometimes whine to Roger about it."

Weeks prior, Mr. Zuckerberg had faced protests from users and privacy groups after launching a new advertising program. One element of the program tracked users' activities on Web sites outside of Facebook and shared those activities with their friends. Some Facebook members complained that this violated their privacy, and one local blog dubbed Mr. Zuckerberg "the Grinch." Around the same time, personal information about Mr. Zuckerberg, including material from his Harvard University application, was posted on a Web site for Harvard alumni.

Facebook's advertising initiative was a turning point in the public's perception of Facebook and its young CEO, who had enjoyed years as a Silicon Valley darling and was now the brunt of a backlash.

A Self-Assured CEO

After founding Facebook as a college student four years ago, Mr. Zuckerberg saw almost instant success. Millions of users flocked to his Web site and top Silicon Valley investors rushed to fund it. Mr. Zuckerberg also become known as a self-assured, even arrogant, CEO. Some of his early business cards read, "I'm CEO ... b -- ." (A Facebook spokeswoman says the cards were meant as a joke.) In a speech in March 2007, he said: "Young people are just smarter."

Mr. Zuckerberg is now finding that young people aren't enough. Like other technology startups, the key skills for Facebook employees in the early days were technology know-how and product development. To keep growing, the company needs to tap people with more traditional skills, including the ability to woo advertisers, manage a big staff and handle public relations.

"I coded the original site and managed the engineering teams," Mr. Zuckerberg says in an interview, adding that his next task is to "work on bringing really talented people into the company to help it scale." Mr. Zuckerberg declined to comment on his personal style or his reputation as a CEO.

Mr. Zuckerberg's experience is emblematic of Silicon Valley's accelerated culture, where startups change more in a few years than most companies do in decades -- forcing CEO-founders to adapt quickly in order to survive in their roles. The founders of Google, Yahoo Inc. and eBay Inc. all handed the reins to outsider CEOs within three years of founding their companies.

To season himself, Mr. Zuckerberg in recent years has reached out to high-profile mentors like Mr. McNamee and Don Graham, CEO of the Washington Post Co. Last year, Facebook brought in trainers including Bill Clinton's former speaking coach to help the CEO improve his speaking style.

Ms. Sandberg joins a roster of recent Facebook hires that includes Chief Financial Officer Gideon Yu, formerly CFO at YouTube, and Vice President of Product Marketing and Operations Chamath Palihapitiya, a former head of AOL's instant-messaging business. Mr. Zuckerberg is also seeking to hire a new general counsel and a vice president of communications and public policy, says Facebook spokeswoman Brandee Barker.

Part of the Struggle

Part of the struggle for quickly maturing startups is that founders don't want to lose their stamp on the company -- something they fear may happen if they hand the reins to a hired CEO. Mr. Zuckerberg says he is trying to build Facebook on his own terms, and indicated recently that he doesn't want another No. 1 in the company. Owen Van Natta, chief revenue officer who previously held the role of Facebook COO, last month said he was leaving the company. The departure was related to Mr. Van Natta's ambitions to be CEO of a company, a title Mr. Zuckerberg isn't willing to relinquish, both men say.

In Ms. Sandberg, whose appointment was confirmed yesterday, Mr. Zuckerberg is seeking an experienced hand who can also enable him to hold on to the reins. "It's going to be very valuable for me to have a partner [to help] me to think about how to do operations, especially as the organization grows very large and as we scale internationally," says Mr. Zuckerberg.

Mr. Zuckerberg built an early Internet venture in October 2003, during his sophomore year at Harvard. He acknowledged hacking into the school's online student directory and accessing students' photos, according to an article published at the time in the Harvard Crimson, the school newspaper. Then he put up a Web site that invited visitors to judge students' attractiveness based on those photos. He was harshly criticized by fellow students for the project and quickly closed it down. Ms. Barker declined to comment on the incident.

His next project was Facebook, which let people create online "profiles," or personal Web pages, through which users could interact with one another. In 2004, he left Harvard and moved to Palo Alto with a few friends. Once in Silicon Valley, he raised funding to expand the Web site, which at first only college students could access.

For a while, he kept up his college lifestyle. Early on, he and his friends worked out of a rented house in Palo Alto, which they allegedly left "in total disarray," with barbecue ashes and broken glass spread on the deck, according to court documents posted on the Web site of "02138," a magazine for Harvard alumni. The documents relate to a lawsuit filed in U.S. district court in Boston in which some former Harvard classmates have alleged that Mr. Zuckerberg stole the idea for a social-networking site from them. Through his spokeswoman, Mr. Zuckerberg declined to comment on the documents or the lawsuit.

When the company moved to an office in downtown Palo Alto, he wore Adidas flip-flops to work and often arrived in late morning and worked until the middle of the night, say people who worked for him at the time. Mr. Zuckerberg has been described by colleagues as shy -- sometimes so uncomfortable socially that he comes across as stiff.

Others describe Mr. Zuckerberg as a quietly thoughtful executive willing to learn from others. "A lot of times, when people meet with Mark for the first time, he's really quiet, and people assume he's not engaged or paying attention," says Matt Cohler, vice president of product management for Facebook. "Actually, he's really engaged and he's trying to listen."

In September 2006, Mr. Zuckerberg's profile grew when Facebook began letting in anyone with an email address, not just students. Around that time, Facebook added a feature called the "news feed" that made it easier for people to track friends' activities on the site. When thousands complained that it violated their privacy, Mr. Zuckerberg upset some further with a blog post telling them to "Calm down. Breathe. We hear you." Later, Facebook changed its privacy settings to make it easier for users to manage how their information is shared.

In May 2007, Mr. Zuckerberg wore his flip-flops onstage at a San Francisco event, where he announced he would let other companies offer services such as games within the Facebook site. Mr. Zuckerberg's investors began urging him to focus on finding a way to turn Facebook's popularity into revenue, say people familiar with the matter.

Mr. Zuckerberg sought seasoned help. He brought on Messrs. Yu and Palihapitiya. Michael Sheehan, a communications coach who has advised Mr. Clinton, came in to teach the CEO how to improve his wooden image, in part by coaching him in public speaking.

He asked friends like the entrepreneur Marc Andreessen, who founded Web-browser company Netscape when he was 22 years old, for advice in keeping Facebook's fast-paced, communicative culture intact as Facebook grew, says a person familiar with the matter. Ms. Barker said Messrs. Zuckerberg and Andreessen discuss business regularly but declined to comment on their conversations. Mr. Zuckerberg also turned to Mr. McNamee. He says he encouraged Mr. Zuckerberg not to sell Facebook or give up his CEO role.

All the while, Facebook kept growing. Last year, Microsoft Corp. invested $240 million in the company, valuing the startup at $15 billion. That gives Mr. Zuckerberg a net worth on paper of at least $3 billion. According to comScore Inc., a Web tracking firm, Facebook had 101 million visitors in January, up from 25 million in January 2007. Facebook's social-networking rivals include MySpace, owned by News Corp., which also owns The Wall Street Journal.

Last summer, Facebook began working on a project that involved attaching ads to messages about a user's activities on the site. These ads would then be seen by the user's friends. The company also designed a feature called Beacon that took this idea a step further: It tracked people's activities on sites outside of Facebook. If someone made a purchase on Overstock.com, for example, Facebook would notify the user's friends through a message, sometimes without explicit permission. Vendors partner with Facebook to participate in the service, and Facebook can make money by displaying tailored ads from the vendors on users' profiles.

At an event in New York in November for top advertisers, Mr. Zuckerberg unveiled the ad program, including the Beacon feature. Efe Cakarel, who runs a service within Facebook that lets users watch independent movies, was with Mr. Zuckerberg and recalls suggesting that advertisers might worry that attaching ads in this way could turn off users. He says Mr. Zuckerberg shrugged off the concern, saying, "They'll like it when they see how well it works." Through a spokeswoman, Mr. Zuckerberg says he doesn't remember the conversation but that it could have happened.

Privacy Complaints

Instead, people complained that Beacon was a privacy invasion. The watchdog group MoveOn.org Civic Action started a petition against Beacon, and companies including online retailer Overstock.com Inc. pulled out of the program or raised concerns about it.

That's when Mr. Zuckerberg complained to Mr. McNamee, asking whether the CEO job was "always this hard." Mr. McNamee recalls answering, "Only if you're successful. And if you're successful, it's really hard, but it's also worth it."

Mr. Zuckerberg deliberated for hours over a public apology letter about Beacon, says a person familiar with the matter. "We simply did a bad job with this release, and I apologize for it," he finally posted on Facebook's blog. He also began requiring users' permission to share their details via Beacon.

Mr. Zuckerberg says he also spoke with Mr. McNamee in December about how to structure his management team. That "led me to consider bringing in someone like Sheryl," he says, "starting a few other executive searches and making some other changes on the team."

Mounting Pressure

Ms. Sandberg had joined Google in 2001 when it had fewer than 300 employees. She helped build it into a global company and run its cash-cow AdWords and AdSense programs. Her unit, which has thousands of staff, now handles sales for about 99% of Google's advertisers.

Late last year, Mr. Zuckerberg met Ms. Sandberg at a holiday party. In January, Ms. Sandberg asked Mr. McNamee for career advice about another job opportunity she was weighing, and he suggested she talk to Facebook before making any moves. Mr. Zuckerberg then met again with Ms. Sandberg over dinner and elsewhere before clinching the hire.

Mr. Zuckerberg and Ms. Sandberg will face mounting pressure to find a better business model. Facebook's Web traffic continues to rise. But industry watchers are now questioning whether that growth will ever translate into Google-size revenue.

According to a person familiar with the company's finances, Facebook hopes to double revenue to $300 million to $350 million this year, its fourth full year in business. Google had revenue of $440 million in its fourth year, a fivefold jump from the previous year.

Mr. Zuckerberg's growing fame has included some unexpected challenges. On a recent trip to Los Angeles, for example, paparazzi caught him leaving a restaurant with a woman and heckled him with suggestions that he was cheating on his longtime girlfriend. The video showed up on the gossip site TMZ.com, but it turned out that the woman was in fact Mr. Zuckerberg's girlfriend.

When Two Well-known Brands Collide (Volkswagen And Porsche)

Here's amazing news from Forbes.com on the possible fusion of well-known car brands Volkswagen and Porsche!

Porsche's announcement on Monday that it had decided to take a majority stake in Volkswagen came just hours after Volkswagen itself announced it was taking majority control of Swedish truck maker Scania. Two big moves within 24 hours? It was all in a day's work for the 70-year-old grandson of Ferdinand Porsche, and typical of his bold leadership.

Piech is the chairman of Volkswagen, but also one of the biggest shareholders in Porsche, with a 13% stake. Born in Vienna, Austria, Piech cut his teeth in the car business, having started out designing and engineering new Porsche models when he was just 26.

In his golden years he has been doing a lot more corporate engineering, facilitating talks between German truck maker MAN and Swedish rival Scania, and pushing for a three way tie-up with Volkswagen's Brazilian truck business last year. That now process should get into gear now that there is little doubt about the future ownership of Scania.

In fact the tie-up of VW, Scania and Porsche spells a European auto giant that makes everything from affordable cars, to trucks, to city buses, to luxury cars and limos. Will Piech want to spin off the truck division? Probably not. The truck making industry is on a roll at the moment and companies like Scania, Volvo and Daimler are reeling from the strong demand in Eastern Europe and other emerging markets.

What Piech really wants is full, unadulterated control of Volkswagen by Porsche itself. That may seem odd to the uninitiated, since Piech is already VW's chairman. But there is a there is a psychological element behind his strategy. "Piech comes from the family that founded both Porsche and VW and he has been working his whole life to bring them back together," said Roman Mathyssek, senior auto analyst for Global Insight.

Volkswagen came about in 1933 when Ferdinand Porsche, Piech's grandfather, was commissioned by the German government to great a "volkswagen"--literally "people's car" in German--that could carry five people. The "volkswagen" went on to become its own corporate entity, though the ties to Porsche have remained strong over the decades.

Today, though there are myriad family interests to complicate matters, nothing much happens at Porsche without Piech's say so. Soon enough, nothing much will happen at Volkswagen without Porsche-as-a-company's say so.

Hence the drive to get Porsche's official stake in Volkswagen above 50%. For Porsche to use Volkswagen's research and development expertise or collaborate on a project, it'll need to go through the right corporate channels. Porsche may also push for restructuring at Volkswagen. At the moment, the State of Lower Saxony, a region in Germany that is the second largest shareholder of Volkswagen, is loathe to make job cuts at VW, but Piech may well see inefficiencies that need addressing and want to use Porsche to direct the change.

In a nutshell, says Mathyssek, Porsche will benefit from VW's breadth of technical expertise (think Audi) while VW will benefit from Porsche as a stable majority shareholder. Above all, Piech will realize his vision.

(image from Weblo.com)