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Data Centers Crucial To Lehman Sale
miller60 writes "What assets retain value in the midst of a financial panic? Data centers. When assets of bankrupt Lehman Brothers were sold to Barclays Tuesday for $1.75 billion, Lehman's data centers and headquarters accounted for $1.5 billion of the value in the deal. That echoes the JPMorgan-Bear Stearns fire sale, in which Bear's two data centers and HQ represented much of the sale price. Amidst financial turmoil, Wall Street's high-tech data centers become the crown jewels for buyers of distressed assets."
Hi! I'm a programmer for Lehman brothers and I'm looking for work. I was the designer of Assett Manager 1.0, a powerful tool that allowed our brokers to get values of our contracts....it's not a bad program, but it had a couple of bugs in it that I would like to have fixed.
This is my sig.
You know what else retains value in the midst of a financial panic? Skyscrapers.
Anytime you have physical assets, you have value. Especially if those physical assets are in continuing demand. (Which data centers are in particular, because the Technology sector is doing quite well right now.)
The only difference is that companies rarely own their own spaces anymore. They sold them off to realty companies long ago, because they didn't want to be in the real-estate business. This sort of sell/lease arrangement is almost certain to become common with data centers in the future. CoLos are already the standard of the industry, and are going to take over increasing amounts of large corporate business in the future.
Javascript + Nintendo DSi = DSiCade
No. it's all about avoiding the expense of building one yourself. The actual data in those centers may or may not be worthwhile to the buying organisation, but the floor space and ready-to-roll IT structure most certainly is.
Posted anon since I was involved in one of these things recently.
Is it any surprise that the most valuable assets in a company that is going down the tubes would be its physical assets, real estate, etc? The summary itself says data centers AND HEADQUARTERS. What a shock that "datacenterknowledge.com" is telling us how valuable and important data centers are. I'm almost tempted to say this is spam, but I can't be bothered to go to the website to learn more about it.
Posted anon since I was involved in one of these things recently.
At least, it would have been if I'd had a brain.
OK, since my name's out I'll finish the job. The operations are most likely valuable, as are the apps running in there. However, come merger and consolidation time merely having those centres around is a tremendous advantage. These things cost serious amounts of cash, and the electronic transaction volumes are growing all the time - yes, even now. So the raw existence of a pre-equipped building is the thing, not necessarily the data files within it.
Cheers,
Ian
And let's not forget the multi-gigawatt generators, the fail-over system, the trained staff, the fire suppression systems, the network infrastructure, the secured access, etc., etc., etc.
The actual servers in the racks are the LEAST valuable part of a good data center. They're also the highest depreciating.
Javascript + Nintendo DSi = DSiCade
Information is timeless and valuable.
I just can't agree with this. When something is timeless that means that it does not age. But information does age. Virtually all information ages; all information relating to human affairs certainly does. The aging of information can be measured not merely in whether it is forgotten, or known, but in how it is considered. Remember: we can still watch the original series of Knight Rider on re-run channels. This does not mean it is 'timeless'. It would be too polite to call it anachronistic.
Even for example the information we have about the collapse of Lehman.
Two weeks ago that information would have been worth billions.
Now it is common knowledge, and the details must be investigated, after the fact.
In twenty years it will be of historical interest, taught in economics classes.
In a thousand years it may have been forgotten.
The very fact that we have already seen different states of this information over two weeks means that it is not timeless.
People are born with compassion and empathy circuits in our brain for a reason, and those that don't have them or can't use them are seriously handicapped.
you had me at #!
Also, a difference between 'dumb' and 'uneducated about financial matters.' Is there a class on ARMS in high school people can take? I don't think those are covered in home ec.
People can't be experts on every field. Add to that fact that finances bring up survival fears in most people, and fear shuts down the brain, and you will see that many people may be smart in many areas, but uneducated about finance.
So people have to trust the experts they hire to do right by them. When those experts say, "Hey, you can own a house now and save that money you were putting into rent. Don't read the fine print, it's boring and it doesn't matter," people trust those experts. And they were misled.
Finally, I know you probably agree with me but I have to point it out: dumb people do not DESERVE to be taken advantage of by smart people. Social Darwinism is an inherently fascist, evil, and anti-social philosophy that destroys societies and people's lives. Don't subscribe to it. Society works because of trust, and social Darwinism destroys that trust.
- None can love freedom heartily, but good men; the rest love not freedom, but license. -- John Milton
I have to point it out: dumb people do not DESERVE to be taken advantage of by smart people. Social Darwinism is an inherently fascist, evil, and anti-social philosophy that destroys societies and people's lives. Don't subscribe to it. Society works because of trust, and social Darwinism destroys that trust.
Quoted because it deserved to be posted twice.
No sig for the moment.
Almost! It's actually about the location of the data center, i.e, close to the exchange. A fast, low latency connection to the exchange gives you a crucial edge over the competition. It means when things change you can get your trades in before your competition does. This is ever more important in the up-and-coming automated trading systems.
No, you're mixing two separate things up. If you don't understand ARMs that doesn't make you dumb. But if you then buy one and you don't understand them, that definitely makes you dumb. What the hell?! A mortgage is a huge commitment. You're going to be paying it back for a long, long time. If somebody commits to a huge thing, turns around and says "Oops! I guess I can't deal with this after all. It was scary and my brain shut down" then I don't see why they are deserving of much sympathy.
No, they were stupid. The risks involved with large debts are enormous. This is way different than being misled by a second hand car salesman and buying a SUV with poor mileage. This is a vast sum of money. If there's one time in your life you read the boring fine print and think about it really hard, it's when taking out a gigantic loan.
Now this I do agree with. However trust can cross a line into blindness. Somebody who does whatever they're told without considering the consequences eventually crosses the line from being a poor innocent misled person into something else - a liability to society.
I am an investment banker and can say with confidence that the datacenters were an afterthought in this deal. Important? Certainly. The most important? a joke. Bob Diamond and Barclays have wanted to extend its US investment banking business for several years, and found an opportunity to grab one at a fire sale. But the true value of the deal is enormously larger than listed, as it involves taking on assets estimated (with confidence, I'm sure)at $72 billion and liabilities of $68 billion. I'd recommend reading http://www.ft.com/cms/s/0/5c9dcc26-83f1-11dd-bf00-000077b07658.html?nclick_check=1 to inform yourselves about the transaction.
As to the Bear Stearns datacenters comprising the bulk of the value - that is about as wrong as you can get. The breakup fee (the fee paid to JP Morgan if the deal did not go through) was the building. JPM could have walked from the deal and gotten the builing, so to argue that the deal was for the building/datacenter is absurd. Let's not forget that the Federal Reserve alone lent $29 billion for the transaction. Datacenters are valuable, but not worth that amount of money.
For people who are still struggling to understand what's going on with the whole financial crisis, here's a great primer I was directed to: Subprime Primer.
It's a very simplified explanation of what's happened. From what I understand, it all comes down to everyone believing that real-estate value wouldn't stop rising.
This space up for sale.