As we enter 2006, MoneyWeek takes a look at the industrialists and entrepreneurs who were the biggest winners in 2005 – and who were the biggest losers.
Greatest comeback kings
This year was the year of private equity, but no two “shareholder activists” caused greater ructions than old timers Carl Icahn and Kirk Kerkorian – two of the most feared corporate raiders during their 1980s heyday. In 2005 they took on Time Warner and GM respectively, with the aim of shaking up the troubled behemoths and extracting value. “King Icahn” appears to have got his way at Time Warner. Kerkorian, 88, still has his work cut out. But few underestimate the former prize fighter. “He’s a born gambler with a sixth sense for sniffing out value,” says former Chrysler boss, Lee Iacocca.
Best turnaround manager
“I’ve got my reputation on the line here. If I don’t deliver this turnaround… I’m going to be trashed,” said Marks & Spencer boss Stuart Rose in January. But he’s delivered and somehow transformed the former high street icon into this year’s big UK retail success story, pushing its shares back up to their 1998 level. Detractors dismiss Rose as “lucky”. But he needed balls to see off Philip Green and a smooth tongue to manage key designer George Davis. He says success is due to a simple mantra: “better product, better environment, better stores”.
Thousands of small businesses owe Geoff and Diana Jones, the husband and wife team behind Artic Systems. They took on the Inland Revenue when it used an obscure tax rule to demand £42,000 in back tax. The tax man claimed the couple were illegally paying Mrs Jones – a lower band taxpayer – too high a percentage of the IT firm’s profits. After a three-year struggle, the Court of Appeal overturned the ruling. The Revenue “nearly got away with it”, says tax expert Mike Warburton. But they underestimated the anger of the Joneses. “We’ve been made to feel like criminals, just for running our own business,” says Geoff Jones.
Best UK exporter
The vacuum cleaner king James Dyson won no prizes for modesty when he described himself as Britain’s most successful export since The Beatles. But few can quibble with his achievement. In just two years since he set out to crack the notoriously tricky US market, his invention has become America’s best-selling cleaner. He still has one major ambition: to become a verb, in the same way that Hoover – or, as he puts it, “the alternative” – has done.
Niklas Zenstrom and Janus Friisare are the founders of Skype, whose free voiceover internet protocol (VOiP) service has been downloaded 215 million times since it was launched last year. The two have now sold to Ebay for $2.6bn – despite never having made a profit.
John Duffield, the maverick manager at New Star, created nearly 40 millionaires – including his secretary – when he floated New Star on Aim in November. Duffield has also come up trumps for investors. Six out of the seven New Star funds were top-quartile performers this year. As a young man, he was determined to become rich to impress Sir Charles Clore, the father of his former wife, Dame Vivien. Clore now describes him as “a lousy husband but an excellent fund manager”.
The market debuts of 888.com and PartyGaming.com may have stolen the headlines, but few can match Betfair for dogged and profitable growth. Launched five years ago by Edward Wray and Andrew Black, Betfair revolutionised online gambling by enabling customers to lay bets as well as back them. Still privately held, the business is now valued at close to £1bn.
And the biggest losers of the year
It was a bad year for big egos. Hewlett-Packard shareholders finally succeeded in ousting the IT industry’s leading glamour puss, Carly Fiorina, after a troubled six-year tenure which saw the share price halve.
New York attorney general Eliot Spitzer remained as busy as ever, forcing the resignation of AIG chairman Maurice ‘Hank’ Greenberg for alleged deception.
There was further scandal when British-born Philip Bennett was arrested for an alleged $430m accounting fraud two months after his trading firm Refco went public. Although this will have brought tears to few eyes, even the most hard-hearted found it hard not to feel a twinge of sympathy when former Worldcom chief Bernie Ebbers shuffled off to begin a 25-year sentence.
In Britain, the year’s chief panto villains were The Phoenix Four, who extracted £40m from dying MG Rover. Regal Petroleum’s Frank Timis’s star also crashed dramatically when it was revealed a “wonder well” off Greece was a dud.
Vanni Treves’ ill-conceived legal action against Ernst & Young resulted in a £75m legal bill for Equitable’s already battered policy-holders.
Conrad Black won the chief prize for defiance: charged with eight counts of “stealing and concealing” from former Telegraph Group owner Hollinger, he slammed the action as “one massive smear job from A-Z”.