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As was noted in The Economist (August 07th issue), and elsewhere, Microsoft has a great deal of undisclosed financial liability, including US$60 billion (yes, with a "B") worth of options debt to their employees that is coming due in the next few years. Were it not for the penchant of humans to live in denial for extended periods of time, the stock would be valued significantly lower, not higher.

Breaking up M$ might make them more valuable than they already are, by diluting the pryamid and allowing them to benefit from the "Baby Bell" phenominon, but it is unlikely that such benefits will come anywhere close to equalling the liability Microsoft has already taken on. In addition, such a breakup will not shield their "offspring" companies from lawsuits (both pending and yet to be filed), many of which, given the Findings of Fact, stand a good chance of going against Microsoft (or its predicessors).

Additional references here, here, and here.

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The problem here is that lately many companies are not sitting on a huge pile of cash.

They issue debt to buy the stock.

This causes a short-term rise in the price of the stock (as any purchase of a significant quantity of stock does) but impacts the long-term viability- and value- of a company.

Most executives, these days, are sitting on huge option plans. It is absolutely in their interest to increase the short-term value of the stock so that they can excersize and sell those options.

The August 07th issue of The Economist has a good few articles on the subject- I believe it's the issue that this gentleman referrs to.

One very scary thing about tech companies in general is that the Stock Options that they give employee's as compensation to make them stick don't count as costs for accounting purposes. But the Options do really count as money, they dilute share holder value, in other words Options really are costs. To quote the Economist "For instance, Microsoft, the world's most valuable company,
declared a profit of $4.5 billion in 1998; when the cost of options awarded that year, plus the change in the value of outstanding options, is
deducted, the firm made a loss of $18 billion, according to Smithers." from 7-Aug-99, sorry a login is required to read old issues.

This is not just a problem with Microsoft but with tech companies in general, I think that this accountancy rules does confuse investors to the profitablity of companies and makes tech companies which have a high percentage of incentive options appear much better on paper than they actually are.

'Nuff said.

There's a longer and very interesting article on Dr Damasio's research in this week's edition of the Economist.

But unfortunately it's not one of the ones they're giving away free on the website, so here are a few paragraphs cut down from the full article. If any of the Economist science writers are out there (I know you sometimes read Slashdot), thanks for a fascinating piece!

"The two patients, now in their early 20s, had survived similar injuries to their pre-frontal cortexes during infancy... Both had lived lonely maladjusted lives with no plans for the future and unfortunate personal habits such as compulsive lying, petty theft, poor hygiene, irregular sex lives, and indifference to their resulting children

"In the set of tests psychologists have dreamt up to quantify moral health, their performance clearly bespoke an ignorance of the conceptual foundations of morality... The patients' responses to these tests were about the same as those that would have been expected from a ten-year-old child: that is, they appeared to be motivated exclusively by a desire to avoid personal punishment [ignoring any wider moral implications]. This degree of pathology is significantly more serious than those found in those who suffer brain damage as adults.

Also, the two "seemed never to have learnt any of the basic moral rules that cover social interaction, apparently because their early traumas prevented them from ever acquiring this sort of information... to all appearances, they suffer from little or no sense of remorse at their behaviour.

"Neurobiologists have long known that the brain can compensate for some sorts of injury that are sustained during the course of its development. It does this by recruiting new sets of nerve cells to substitute for those that have been damaged or destroyed. The pre-frontal cortex, however, seems to be unable to repair itself adequately in this way, leaving infant victims with no means of learning right from wrong during the relevant period of their growth.

"The solution, Dr Damasio postulates, may lie in helping that part of the brain to annex more nerve cells, by carefully adjusting levels of the relevant neurotransmitters..."

Thus, even if Dr Gould and Dr Gross are right that there are always new neurons migrating to the pre-frontal cortex, it seems they can't always be integrated.

This means each of these companies is looking for some new angle that they can impress their customers with. Afterall, they are just repackaging public information. They have no spies, and only rarely get tips from people in the know. It is unsurprising that Jane's might use a forum like /. to get relatively current info. I have my suspicions that others have done the same thing, if not here than elsewhere, without admitting to it. And certainly, all these "intelligence services" know how to use Inktomi, Altavista, and other search services to find relevant material wherever, including /.

What they need to watch out for is that the information on /. does not come with a built-in credibility meter. It is just as possible to pass complete BS off here as it is anywhere else. There's no substitute for actually knowing what your talking about.

A method and system for placing an order to purchase an item via the Internet.
The New York Times and the The Ecomomist have a system for buying "items" with one click.
These "items" are articles from previous issues but it does the exact same thing that Amazon is trying to patent. Can Amozon belive the patent will actually stand? If not then why are they patenting something that obviously is a) not invative and b) has an example of prior art?
%vi .emacs

"For instance, Microsoft, the world's most valuable company, declared a profit of $4.5 billion in 1998; when the cost of options awarded that year, plus the change in the value of outstanding options, is deducted, the firm made a loss of $18 billion, according to Smithers." What does Mr. Gates have to say regarding this? 2. Since Microsoft is the most universally hated company amongst the technical community, is it becoming more and more difficult to find employees willing to work for you? Paul

Fair comments, but I think it's more of a done deal than you suggest.

It's been in the offing for ages, and it's a nice fit particularly with the Sprint PCS wireless business. Bell South isn't a serious competitor given the regulatory hurdles, which aren't too bad for Sprint & MCI at all given their overlap. The European telecoms companies are all screwed up after the Telecom Italia fiasco and not seriously in the running.

There's a good long story at the NYT that covers many of these issues and also an editorialat the Economist.

The idea is to make people put their money where their mouth is. That way you get a more honest and thoughtful opinion than just stopping random people in the street. The fact that the game players are not a random sample matters less because they reflect all the available evidence rather than just their own views.

IIRC, the idea is that you buy a future contract which will pay off according to the share of the next vote. So the current market value of these contracts reflects the (hopefully) rational expectations of the traders.

Paul.

Not so fast.

You're absolutely right that ./ and FR are filtering mechanisms and do not begin to encompass the whole process of journalism, which is built on a great deal of generally unappreciated shoe leather and sweat. The community filters don't do the grunt work of uncovering, investigating, reporting the news. They're getting a free ride on the sweat equity created by the traditional news sources. Taken apart, they don't really threaten traditional news sources.

But the traditional news sources -- particularly local newspapers, where a great deal of wire news really originates -- are in serious economic jeopardy due to the macro effects of the Internet on commerce, vicious new competitors in key market segments (such as classified advertising), and major shifts in audience attention.

There's a good piece on this in the Economist this week.

By the way, I think Matthew Priestley's analysis of the relative economic value of readers and advertisers is flawed and shortsighted, but the piece raises some serious issues and I'm passing the URL along to some colleagues.

An article has appeared in this weeks copy of
the Economist online. It is mostly concerned
with the impact of internet as a successor technology to
the newspaper.

Quote:"Get rid of the need for physical inputs, however, and the economics of the business changes completely. Once the barriers to entry disappear, so does the rationale for the package of content and revenue that makes up a newspaper. Now that being a publisher costs so little, niche publishers can pick off speciality areas of content-the weather, say, or the stockmarket-and build a business around them. Classified advertisers can set up their own sites where prices to advertisers are likely to be lower because they do not have to pay for the physical inputs or subsidise the content. The newspaper, it turns out, was a hundred different businesses rolled into one; and, now that the economic glue that held them together has dissolved, they could fall apart."

The article is available at www.economist.com

His comment that computers don't seem to result in producivity gains doesn't hold a lot of water. Some sensationalized studies have claimed that, but I don't think there's a lot of truth to the matter.

In their 28 Sep 1996 issue, The Economist has an extensive discussion of this topic. There are a number of reasons why those studies are probably giving the wrong answer. The most interesting, though, is that productivity measures are pretty crude.

Consider, for example, the field of publishing. When you compare magazines now with magazines from a few decades ago, modern magazines are generally slicker, and a lot of that is due to the use of desktop publishing systems. For the same amount of effort, you can get a much better result. From the productivity measure point of view, though, the quality improvement is invisible; that's because magazines still use about the same number of people to produce the same number of magazines.

They also mention some interesting examples in other areas:

In areas such as finance health care and education government statisticians typically assume that output rises in line with the number of hours worked. The bizarre effect is that measured productivity growth is zero by definition. Likewise telecommunications output is measured in minutes of calls leaving out the huge increase in information transmitted via faxes or faster modems. Or suppose a road-haulage firm introduces a computer system which helps drivers to pick the quickest route and thus provide a better service for its customers. If mileage drops as a consequence the official statistics will show a fall in real output.

The basic upshot of this that traditional producivity measures were great for the industrial revolution, but don't mean as much today.

For more information, check out The Economist; it's a lot more than just a financial magazine. I've been reading it for years, and I think it's one of the best general newsweeklies in existence. It's certainly a lot more substantial and thoughtful than Time or Newsweek.

William
email: dubl-u (at) pota.to (no foolin!)

His comment that computers don't seem to result in producivity gains doesn't hold a lot of water. Some sensationalized studies have claimed that, but I don't think there's a lot of truth to the matter.

In their 28 Sep 1996 issue, The Economist has an extensive discussion of this topic. There are a number of reasons why those studies are probably giving the wrong answer. The most interesting, though, is that productivity measures are pretty crude.

Consider, for example, the field of publishing. When you compare magazines now with magazines from a few decades ago, modern magazines are generally slicker, and a lot of that is due to the use of desktop publishing systems. For the same amount of effort, you can get a much better result. From the productivity measure point of view, though, the quality improvement is invisible; that's because magazines still use about the same number of people to produce the same number of magazines.

They also mention some interesting examples in other areas:

In areas such as finance health care and education government statisticians typically assume that output rises in line with the number of hours worked. The bizarre effect is that measured productivity growth is zero by definition. Likewise telecommunications output is measured in minutes of calls leaving out the huge increase in information transmitted via faxes or faster modems. Or suppose a road-haulage firm introduces a computer system which helps drivers to pick the quickest route and thus provide a better service for its customers. If mileage drops as a consequence the official statistics will show a fall in real output.

The basic upshot of this that traditional producivity measures were great for the industrial revolution, but don't mean as much today.

For more information, check out The Economist; it's a lot more than just a financial magazine. I've been reading it for years, and I think it's one of the best general newsweeklies in existence. It's certainly a lot more substantial and thoughtful than Time or Newsweek.

William
email: dubl-u (at) pota.to (no foolin!)

I've been an Economist subscriber for a few years now, and despite some problems I've been pretty impressed with it, particularly it's technical reporting. So I've been submitting Economist stories to slashdot off and on (because I'm sick of all the pointers to zdnet, cnn and msnbc)... I thought about submitting this one, but it looked like pretty lame business-think stuff to me, so of course, this is the one that made it. Whatever.

However, it is true that they can be a bit naive about computers (e.g. I remember a particularly funny article about how wonderful Object Oriented programming is because of all the code that gets reused, thereby saving oodles of programming dollars).

Anyway: the primary strength of the Economist is that they really do report on global news (unlike, say "US News and World Report", where the "world report" half of their title typically refers to one page). The Economist, on the other hand has lots of stories about things like competing consititutional conventions in Zimbabwe (have you heard about that one? Why not?).

It's a bit misleading to call it a "conservative" publication, because it's British and it has different biases than American conservatives do. They're rabidly opposed to the right to bear arms, regard the death penalty with suspicion, and they're opposed to the "War on Drugs". They're also nowhere near as hostile to the UN as American conservatives... and they're positively in love with the IMF and the World Bank (I would guess that the average American doesn't even have a clue as to what the IMF does.)

Just for the hell of it, some links on that subject:

• The IMF
• The World Bank
• Example of a pro-IMF, etc article at he Economist
• Some anti-IMF, etc articles courtesy of Global Exchange

>In the UK, citizens do not have the right to keep and bear arms. Therefore they have no rights, no power, no authority, no voice, and no choice.

*rant*
What absolute bullshit. What gives you "rights, voice and choice"? Carrying weapons or participating in the democratic process? More people vote in the UK than in the US, that is a better sign of a country's health than how easy it is to obtain tools to kill someone. A well armed militia is NOTHING against an army. A well EDUCATED citizinry is the best tool against oppression, and the UK beats you hands down there as well in all international tests.

And who are you to talk about rights? As long as your country continues to execute children in defiance of international human rights, you have NOTHING to say about how other countries run their business.

But if we get back to the issue of right to privacy, it the US which is successfully bullying the goverments of other countries to deny their citizens human rights, as the article shows again.

>And guess what? It WILL happen here.

Banning guns? I certainly hope so. A lot of innocent people lose their lives each year in the US because some gun nuts have a pathological need to play with their phallic symbols.
*rant off*


BTW - here is a pretty amusing link from this weeks issue of the Economist:
The gun commandments . "5. Thou shalt not kill, except when provoked. But if thou dost, remember that thy gun had nothing to do with it."


Cheers,
Lars

It seems like anyone who knew enough about Linux to write a decent article would know enough to get a better paying job as a sysadmin or programmer. This sometimes goes for technical documentation and Q/A departments too. If you want to read good technology articles from the "mainstream" press, check out The Economist.

AS A long-time admirer of The Economist's stance on business and economics, I have been surprised by your recent coverage of Microsoft

Since when is open source 'thhhbbbbting' Silicon Valley?!? Silicon Valley is where it's strongest. It's "thhhbbbting" Redmond more than Silicon Valley.