Wednesday, July 7, 2010

Dassault


On Friday, May 28, the group met with Mr Alain Girardeau-Montaut, Exchange Risk Manager of Dassault Aviation. Dassault is the maker of the Falcon Jet and is a world leader in global aviation. It is a privately held global company and still owned by its founding family. At the meeting we learned about their process of hedging currency risk through derivatives trades. Dassault utilizes swaps, futures, and forward contracts to hedge or mitigate the risk of adverse currency movements. They do not speculate on the foreign exchange market as a way to invest. Dassault also hedges currency risk by diversifying their operations in the U.S. and Europe. They have factories in the U.S. and in Europe and keep 60% of their costs in Euro and 40% in USD. This gives them more flexibility than if they had their entire operation in Europe using one currency. We discussed some of the different factors that drive exchange rate movements such as oil. As oil prices rise, the US dollar typically declines, and the Euro increases. The inverse is also the case. This is because high oil prices are generally bad for the US economy, therefore detracting investors from investing in US treasuries and potentially enticing them to invest in the Euro. The issue of credit or counterparty risk was also discussed. Dassault mitigates this risk by requiring all counterparties to post collateral and mark to market daily. Dassault believed at the time of our meeting that the Euro was an attractive level to buy, which 1.23 to the USD. The meeting was very finance specific but was interesting to me because I am concentrating in finance and had just taken the Investments class where we learned about derivatives.


Friday, July 2, 2010

Phillips Global Headquarters- Amsterdam

On Tuesday May 25th, the group visited the global headquarters of Phillips. The company was originally founded in Amsterdam in 1891 and today employees over 116,000 people. At the start of our visit we were greeted by Nancy Work who escorted us to a conference room where lunch was waiting for us. This was great news for me as I was extremely hungry after a long night out the prior evening and missing breakfast before check-out ;-)

The meeting was spread out over 4 hours with presentations from four individuals. The company overall makes a big effort to promote healthy living and specializes in energy efficient consumer goods. They have three areas of focus, including Healthcare, Lighting, and Consumer Electronics.

The brand is based around "Sense and Simplicity" and much of what they showed us lived up to this motto. Several products were discussed and more than a few caught my attention.
Probably one of their more well know products are their LED lightbulbs. These bulbs run on just 10 watts and last 25 times longer than the old 60 watt incandescant bulbs. Just by purchasing their lightbulbs and installing them in your home you get a sense that you are doing your part to conserve energy.

Two other products really stuck out for me that day. The first was a concept for a new street light that generated its own energy by solar power and wind power. The design was to resemble a flower that could open or close based on if it was in use or producing energy. This i san idea that I think could really gain some traction as elected officials around the globe look to cut costs for things that are more or less essential to the infrastructure of our cities.

The second product that stuck out for me was the concept of a solar "alarm" clock. Instead of waking to an annoying alarm, it is designed to simulate the rise of the sun and the light itself woudl gently wake you up in the morning. That sounds very interesting and I have even found it on their website for $169.99. Check it out!

We also had some interesting discussion about lighting of stadiums and new LED ambient lighting that is being used on the tops of buildings and public spaces to really change the dynamics of skylines. In fact, it was revealed that the Prudential Tower in Boston is actually one of their clients and they are working on new lighting options for the top of that building.
Overall, our trip to Phillips was highly informatitive, very interesting, and well worth the trip!