There was this great article in Forbes about whether Google has hit its peak revenues.The author writes
I’m normally extremely sceptical of arguments about “Peak” stuff. Peak copper, peak oil, peak water, I can usually be relied upon to pooh pooh or rubbish those stories about natural resources running out. However, with corporates and with technological offerings I’m entirely ready to accept such peak arguments. For any company is only ever exploiting a technological niche provided by the current technological environment. And those disappear just as quickly as they arise. So I’m convinced that we will indeed reach peak Google.
Now that leads me to think if there are any Indian companies out there who have hit peak revenues.Lots of companies in the past have been done in by technological changes – Tata Yellow Pages, Moser Baer etc
The interesting question is which company right now is having peak or close to peak revenues and will get done in by technological/regulatory changes.
I feel Hero Moto Corp fits the bill. The separation from Honda has ruptured this companies’ DNA. It is struggling to sell its dated models.In Sept 2012, it sold 4.04 L units of two wheelers as compared to 5.49 last year (a fall of 27%).Bajaj in contrast witnessed a decline of only 12%.
Hero is cash rich and is investing aggressively in R&D to fill the technology gaps in its product line.But the auto business is such that you need a dynamic promoter at the helm who is passionate about the product.Think Ratan Tata,Rajiv Bajaj, Anand Mahindra etc.All of them are involved in the design of every new product.
Fierce competition, technological irrelevance and mediocre management all point to “peak” Hero Moto Corp