You're still saying that less than optimal profit is a cost.
No, I'm saying that the true cost of any action is equal to what you had to give up in order to take that action. If I decide to spend $10 on some ice cream, the true cost of that ice cream is all the other stuff I could have bought with the $10. And, if I get more benefit from the ice cream, than I would from any other option, I made the rational economic choice. It's a concept called opportunity cost; it underlies most economic thought.
I'm simply trying to show that when the government gives out a low interest loan, it costs something. If Tesla gets $6 more benefit from a government loan, than a private one, someone has to have given up that six dollars; that extra value doesn't just appear from nowhere. If this kind of loan were truly "costless", why shouldn't the government just give them out to everyone? Why shouldn't they simply refinance everyone's mortgage (and credit card debt, and student loans, and corporate bonds) at a very low interest rate? If these loans don't have a cost, it's the rational thing to do.
Yes, you are saying that they should seek to maximize profit.
I'm saying that the government should seek to make decisions that maximize the benefit, while minimizing the cost, when disposing of the resources in our economy. A low interest loan like this may have huge positive benefits for our economy. But, that's only half the equation; we have to look at the costs, to see if the benefits outweigh them.
So, we have to look at what we are giving up, the opportunity cost of this decision, in order to make this loan. I said that the government could loan the money out at market interest rates. In reality, they'd probably never do that. But, if they had never collected that money in taxes in the first place, those taxpayers would have been free to do what they want with it. And, one of the things those people could do is loan it out at the market rate, and see $10 in benefits. Now, maybe they won't loan the money out at 10%, they could spend it or invest in other ways. But, assuming those people (in aggregate) are rational economic actors, if they choose not to lend the money for a $10 benefit, the benefit they do hope to realize from what they do spend it on must be higher than $10. So, $10 is a simple lower bound for the benefits that money could bring, if not lent to Tesla.
So, the cost of loaning the money to Tesla at 4% is at least $10. Assuming that Tesla doesn't default on the debt, one of the benefit's will be the $4 interest paid. So that brings our net benefit number to -$6. In order for this loan to be economically rational, we have to get at least $6 more benefit.
I'm not saying that this loan doesn't make economic sense. But, in order to answer that question, we have to look at the costs as well as the benefits.
The difference in interest is not a cost. The government does not suddenly have less money than they did before.
You're right. They don't have less money. But, what they do have one less option for what to do with that money. Before they make the loan, they have to option to loan it to Tesla at 4%, or to do something else with the money. But, as soon as they pick one or the other option, they lose the ability to have the other too. They're mutually exclusive. If they do something else with the money, the cost is the loan to Tesla (and that loan's associated dollar value). If they give the loan to Tesla, the cost is whatever else they would have done with the money. That's opportunity cost.
They didn't lose money, they lost the option to do something else. And that option is worth something.
The big difference here is you are viewing cost as a theoretical object that defines something less than optimal.
Nope. Even making the optimal decision still has costs: all the other non-optimal things you could have done. It's just that when you make the optimal choice, the benefits outweigh the costs.
Wow, no wonder our economic system is so screwed up. Profit isn't good enough, it has to be the highest return possible or somebody somewhere screwed up. Nevermind secondary benefits such as increased tax revenue from income and sales, or reduced trade deficit.
I never said the government should seek to maximize profit. And, of course, this low interest loan may have huge societal benefits. But, the cost of issuing the low interest loan is equivelent to the cost of giving Tesla money outright. Just because it's a loan, doesn't make it any less a subsidy.
I've read the whole thread and you simply have the wrong idea about how the U.S. federal government relates to money. It is never an option to lend out government money at market rates and it is never an option for the government to maximize profit. Government is a public institution that spends money--collected through taxes and borrowing--to accomplish public policy goals.
No, I never meant to imply that the government should lend money at the market rate, or that it should seek to maximize profit (whatever that means for a government). The OP made the statement that a below market rate loan was not equivalent to giving Tesla a subsidy (or "bailout").
But it is. It's the equivalent of the government cutting Tesla a check for the difference in interest, and letting them get a private loan. Either way, it's a transfer of money from the government (the taxpayers), to Tesla.
No, seriously, that is just fucking stupid. I'm not saying YOU are stupid, but at this point the argument is completely opinion based. Opportunity cost has got to be the dumbest idea since mark-to-market.
No, no. Blame me and my apparent bungling of this line of argument, not opportunity cost. It's a valid concept that underlies all of economic thought.
Think of all the imaginary money I lose by sleeping.
Look at it this way: Let's say you value sleep at $10/hour. And that you could get a second, overnight job at the 7-11 for $8/hour. Now, you could say that you're losing $8/hour by sleeping instead of working. But, that leaves out half the equation. You benefit more from the sleep than you would working. It's just that the benefit isn't $10/hour, it's only $2/hour, you lose $8/hour but gain $10/hour. It still makes sense for you to sleep, as the benefit of sleeping outweighs the opportunity cost of not working. But not working still has a cost, even if it is outweighed by the benefits of sleeping.
I'm just saying that giving this loan to Tesla may make as much economic sense as working instead of sleeping does, in the above example.
If you want to imagine that "lend the money at market rates" is amongst the options for what the government would've done if not for bailout loans, that's your business. I challenge you to point out when government has done such a thing.
I don't know that the government ever has. It might be unprecedented, but then, so is much of what the government has done since the start of this financial crisis. But, I don't see any reason why the government couldn't lend out money at market rates, if they wanted to.
I'm just trying to say that, even though this loan would pay interest and, assuming Tesla doesn't default, will end up turning a profit, this loan costs something to issue: all the things the government or the taxpayers could have done with the money. The "lending at market rates" example shows that there is something the government could do which would be more profitable. By not pursuing the more profitable option, we're losing that opportunity and whatever benefits it would have provided.
The rest of your argument seems to be about whether government intervention is a good idea at all. I haven't stated a position on that matter, so maybe you should stop making assumptions.
I don't think I've assumed anything regarding your position on this loan. I was originally trying to counter the idea that this use of government funds is costless, simply because it is a loan, not a grant.
Yes they did. It's called opportunity cost. The government had the opportunity to lend the money to Tesla at 10%. Instead, it lent them the money at 4%. So, the government no longer has the opportunity to lend them the money at 10%. The government had two, mutually-exclusive, choices: 10% or 4%. It could have one or the other, but not both.
If the government chooses to lend at 4%, it loses the opportunity to lend at 10%. Now, the dollar value of each choice is $10 for the 10% choice, and $4 for the 4% choice. So, the cost of pursuing the 4% choice is the difference of the two, $6.
The government did lose something: the opportunity to lend at 10%, the value of which is $10.
In a bailout, the vendor (government) actually loses something in order for the buyer (Tesla obviously) to make the purchase in the first place.
The government is actually losing something: the $6 more they could have charged in interest. It is the opportunity cost of that "bailout", and someone has to pay for it. Either way the government does it, Tesla ends up with six extra dollars, and the government(taxpayers) end up with six less. We're giving them $6.
The only way the government loses $6 is if they borrow the money at 10% in order to lend it to tesla at 4%.
No, the opportunity cost of that low interest loan is $6. The government (read: the taxpayers) bear that cost.
But yes, every taxpayer could be said to pay a bit toward the subsidy, to the extent that taxes track losslessly to government spending.
But, if Tesla had to get the loan from private lenders, only those who were willing to bear the risk would be bearing it. If the government lends them money, all of us--whether we think the loan is a good idea or not--are bearing that risk. And, because we're not charging an interest rate adequate to cover that risk, we are bearing more risk than a private lender.
By your standards, if I choose to charge you $10 for a meal I'm giving you money because if I wanted to, I could charge you $20. There is a difference between letting someone keep what they have and giving it back to them just like there is a difference between a low interest loan and a bailout.
Okay. If you charge me $10 for a meal, I end up +1 meal and -$10, and you end up -1 meal and +$10, right? But, if you charge me $20, I end up +1 meal and -$20, and you end up -1 meal and +$20, right?
So, in the first case, I have ten more dollars than in the second, and you have ten less, other than that, they are exactly the same. How is that ten dollars any different than $10 you just give me as a gift? It spends exactly the same, and has exactly the same utility to me.
If Tesla took out a loan from the private market at $100, they pay the private market $110, get $6 from the government, and the bank has $10 they didn't before, Tesla has $6 they wouldn't have otherwise, and the government has -$6.
No. The government doesn't have -$6; the taxpayers (you, I, and the private lenders) end up with -$6.
If Tesla takes out a loan from the government, they pay $104, still having the $6 they wouldn't have otherwise, and the Government now has $4.
No. The government could have lent out that money at 10%, on the open market. The government doesn't have $4, they have -$6; that's the opportunity cost of loaning the money out at below market rates. And, the taxpayer has to bear that cost.
If the government makes the loan, the government makes $4 and the private lender gets nothing.
It gets quite a bit more complicated here. If the government makes the loan, they don't make $4, they lose $6. Instead of loaning it to Tesla at below market rates, they could have entered the debt market and lent it to others at 10%. When they loan the money to Tesla, they lose $6, and Tesla gains $6.
If the government hands over $6 and sends Tesla to the private lender, the lender makes $10 and the government spends $6.
The lender doesn't net $10. The government has to recoup the $6 it spent through taxes, and some of that will come from the lender. Sure, the lender ends up with more money in this situation than in the other. But, someone in the economy has to come up with the $6.
It's the same from Tesla's POV, but not from anyone else's.
Well, certainly the private lender would prefer the second scenario. But the economic impact is the same in either: the government is out $6, and has to come up with that money from somewhere. Which one you pick depends upon who the government decides should be the "winner".
Yes, because every time a company underbids another to get a contract, that is equivalent to writing a check.
Exactly.
If Tesla needs a $100 loan for one year, and the market would charge 10% interest, but the government only charges 4%, then, at the end of the year, Tesla would have to repay the private debt holders $110, but would only have to repay the government $104. The government effectively gave Tesla $6. If, instead of loaning Tesla the money directly, the government just wrote Tesla a check for $6 and let them get the loan from the private debt market, the result would be exactly the same.
It works the same for companies competing for a contract, or consumers hunting for the best price. Let's say you want to buy a widget, and company A charges $100, and company B charges $90. If you buy the widget from company A, you have a widget and -$100. If you buy from B, you have a widget and -$90. So, if I buy a widget from B, I have $10 more than I would have had if I had bought from A. That $10 has identical utility to $10 paid by check.
So yes, the government is giving them money -- but it's still not a bailout.
If you define a bailout as money the government gives you to maintain your status as an ongoing concern, then you're probably right. Tesla says they don't need this money to remain in business, just to expand quicker. So, if it's not a bailout, it's simply a government subsidy, even though it's a loan, not a grant or preferential tax treatment.
It's a LOAN, not a bailout. You have to pay back loans.
The government is "giving" them the difference between the market interest rate, and the one the government would give them. If the market rate is 10%, and the government gives them the loan at 4%, the government is giving them the 6% difference as a handout. That's the equivalent of writing Tesla a check. It's a bailout.
I think people have discounted the buyback because, well... what else were they going to do with all that money. If you know the buyback is coming, it gets priced in almost right away. Also, I think MSFT trades less like a tech company, and more like a utility. Instead of focusing on growth, they have to grow their margins, which is tougher.
And so: why is its market capitalization at $172bn now, while it was at $300bn one year ago?
Two reasons:
The first is growth. MSFT isn't growing as fast as it once was. It's a mature company, and cannot sustain the rate of growth it once did. But, just because it isn't growing as quickly, does not mean that it is not growing and making money.
The second is that there simply isn't enough money in the stock market to sustain their previous stock price. The entire market is down 50% And, bear in mind that market cap is only very, very, loosely correlated with the strength of the underlying corporation.
Microsoft's market cap has nothing to do with its profitability (what I was originally commenting on). Microsoft continues to make money. Look at its balance sheet.
Their cash mountain has just about vanished though.
Are you talking about the $20 billion they currently have in the bank? Because, that seems like quite a mountain to me. Yes, it has gone down, but they're buying back billions of shares of their own stock. It's not like they're losing the money.
Its easy to say they are losing money. Q4 2008 net cashflow: $-2bn. Part of that loss was down to financing and investing activities.
Well, if they hadn't bought back $9 billion of their own stock, they would have had a net cashflow of +$7 billion. So, they're not losing money; they're buying back stock, something that has nothing to do with the strength (or lack thereof) of their business.
Microsoft are the richest corporation on the planet (to my knowledge) but their income is fading. They are losing money hand over fist for all sorts of reasons.
What are you talking about? Last year, MSFT's total revenue was $60 billion, compared to $51 billion for FY07. Gross profit was $48.8 billion versus $40.4 billion. And, net income was $17.7 billion versus $14 billion. Their income is not fading. And, they aren't losing money hand over fist.
If I say I have $1 M, NOBODY is going to think I mean thousand.
Well, that depends on who you're talking to. If you say that to an accountant, he might just think you mean thousand. A lot of corporation's financial filings have the M=thousand MM=million notation.
Yeah, it should be. And, when actually using Roman numerals, it is. But, for some reason MM means million when used like this. Don't ask me why; it didn't make any sense the first time I heard about it.
There is nothing from keeping anyone from getting access to these books the same way that Google did...
FTFA:
Since no such authorization is possible for orphan works, only Google would have access to them, so only Google could assemble a truly comprehensive book database.
It sounds like this settlement is what's preventing any potential competitor from getting access to these books the same way Google did.
Slashdot Mirror
You're still saying that less than optimal profit is a cost.
No, I'm saying that the true cost of any action is equal to what you had to give up in order to take that action. If I decide to spend $10 on some ice cream, the true cost of that ice cream is all the other stuff I could have bought with the $10. And, if I get more benefit from the ice cream, than I would from any other option, I made the rational economic choice. It's a concept called opportunity cost; it underlies most economic thought.
I'm simply trying to show that when the government gives out a low interest loan, it costs something. If Tesla gets $6 more benefit from a government loan, than a private one, someone has to have given up that six dollars; that extra value doesn't just appear from nowhere. If this kind of loan were truly "costless", why shouldn't the government just give them out to everyone? Why shouldn't they simply refinance everyone's mortgage (and credit card debt, and student loans, and corporate bonds) at a very low interest rate? If these loans don't have a cost, it's the rational thing to do.
Yes, you are saying that they should seek to maximize profit.
I'm saying that the government should seek to make decisions that maximize the benefit, while minimizing the cost, when disposing of the resources in our economy. A low interest loan like this may have huge positive benefits for our economy. But, that's only half the equation; we have to look at the costs, to see if the benefits outweigh them.
So, we have to look at what we are giving up, the opportunity cost of this decision, in order to make this loan. I said that the government could loan the money out at market interest rates. In reality, they'd probably never do that. But, if they had never collected that money in taxes in the first place, those taxpayers would have been free to do what they want with it. And, one of the things those people could do is loan it out at the market rate, and see $10 in benefits. Now, maybe they won't loan the money out at 10%, they could spend it or invest in other ways. But, assuming those people (in aggregate) are rational economic actors, if they choose not to lend the money for a $10 benefit, the benefit they do hope to realize from what they do spend it on must be higher than $10. So, $10 is a simple lower bound for the benefits that money could bring, if not lent to Tesla.
So, the cost of loaning the money to Tesla at 4% is at least $10. Assuming that Tesla doesn't default on the debt, one of the benefit's will be the $4 interest paid. So that brings our net benefit number to -$6. In order for this loan to be economically rational, we have to get at least $6 more benefit.
I'm not saying that this loan doesn't make economic sense. But, in order to answer that question, we have to look at the costs as well as the benefits.
The difference in interest is not a cost. The government does not suddenly have less money than they did before.
You're right. They don't have less money. But, what they do have one less option for what to do with that money. Before they make the loan, they have to option to loan it to Tesla at 4%, or to do something else with the money. But, as soon as they pick one or the other option, they lose the ability to have the other too. They're mutually exclusive. If they do something else with the money, the cost is the loan to Tesla (and that loan's associated dollar value). If they give the loan to Tesla, the cost is whatever else they would have done with the money. That's opportunity cost.
They didn't lose money, they lost the option to do something else. And that option is worth something.
The big difference here is you are viewing cost as a theoretical object that defines something less than optimal.
Nope. Even making the optimal decision still has costs: all the other non-optimal things you could have done. It's just that when you make the optimal choice, the benefits outweigh the costs.
Why can't they?
Wow, no wonder our economic system is so screwed up. Profit isn't good enough, it has to be the highest return possible or somebody somewhere screwed up. Nevermind secondary benefits such as increased tax revenue from income and sales, or reduced trade deficit.
I never said the government should seek to maximize profit. And, of course, this low interest loan may have huge societal benefits. But, the cost of issuing the low interest loan is equivelent to the cost of giving Tesla money outright. Just because it's a loan, doesn't make it any less a subsidy.
I've read the whole thread and you simply have the wrong idea about how the U.S. federal government relates to money. It is never an option to lend out government money at market rates and it is never an option for the government to maximize profit. Government is a public institution that spends money--collected through taxes and borrowing--to accomplish public policy goals.
No, I never meant to imply that the government should lend money at the market rate, or that it should seek to maximize profit (whatever that means for a government). The OP made the statement that a below market rate loan was not equivalent to giving Tesla a subsidy (or "bailout").
But it is. It's the equivalent of the government cutting Tesla a check for the difference in interest, and letting them get a private loan. Either way, it's a transfer of money from the government (the taxpayers), to Tesla.
No, seriously, that is just fucking stupid. I'm not saying YOU are stupid, but at this point the argument is completely opinion based. Opportunity cost has got to be the dumbest idea since mark-to-market.
No, no. Blame me and my apparent bungling of this line of argument, not opportunity cost. It's a valid concept that underlies all of economic thought.
Think of all the imaginary money I lose by sleeping.
Look at it this way: Let's say you value sleep at $10/hour. And that you could get a second, overnight job at the 7-11 for $8/hour. Now, you could say that you're losing $8/hour by sleeping instead of working. But, that leaves out half the equation. You benefit more from the sleep than you would working. It's just that the benefit isn't $10/hour, it's only $2/hour, you lose $8/hour but gain $10/hour. It still makes sense for you to sleep, as the benefit of sleeping outweighs the opportunity cost of not working. But not working still has a cost, even if it is outweighed by the benefits of sleeping.
I'm just saying that giving this loan to Tesla may make as much economic sense as working instead of sleeping does, in the above example.
If you want to imagine that "lend the money at market rates" is amongst the options for what the government would've done if not for bailout loans, that's your business. I challenge you to point out when government has done such a thing.
I don't know that the government ever has. It might be unprecedented, but then, so is much of what the government has done since the start of this financial crisis. But, I don't see any reason why the government couldn't lend out money at market rates, if they wanted to.
I'm just trying to say that, even though this loan would pay interest and, assuming Tesla doesn't default, will end up turning a profit, this loan costs something to issue: all the things the government or the taxpayers could have done with the money. The "lending at market rates" example shows that there is something the government could do which would be more profitable. By not pursuing the more profitable option, we're losing that opportunity and whatever benefits it would have provided.
The rest of your argument seems to be about whether government intervention is a good idea at all. I haven't stated a position on that matter, so maybe you should stop making assumptions.
I don't think I've assumed anything regarding your position on this loan. I was originally trying to counter the idea that this use of government funds is costless, simply because it is a loan, not a grant.
No, the government didn't "lose" anything.
Yes they did. It's called opportunity cost. The government had the opportunity to lend the money to Tesla at 10%. Instead, it lent them the money at 4%. So, the government no longer has the opportunity to lend them the money at 10%. The government had two, mutually-exclusive, choices: 10% or 4%. It could have one or the other, but not both.
If the government chooses to lend at 4%, it loses the opportunity to lend at 10%. Now, the dollar value of each choice is $10 for the 10% choice, and $4 for the 4% choice. So, the cost of pursuing the 4% choice is the difference of the two, $6.
The government did lose something: the opportunity to lend at 10%, the value of which is $10.
In a bailout, the vendor (government) actually loses something in order for the buyer (Tesla obviously) to make the purchase in the first place.
The government is actually losing something: the $6 more they could have charged in interest. It is the opportunity cost of that "bailout", and someone has to pay for it. Either way the government does it, Tesla ends up with six extra dollars, and the government(taxpayers) end up with six less. We're giving them $6.
The only way the government loses $6 is if they borrow the money at 10% in order to lend it to tesla at 4%.
No, the opportunity cost of that low interest loan is $6. The government (read: the taxpayers) bear that cost.
But yes, every taxpayer could be said to pay a bit toward the subsidy, to the extent that taxes track losslessly to government spending.
But, if Tesla had to get the loan from private lenders, only those who were willing to bear the risk would be bearing it. If the government lends them money, all of us--whether we think the loan is a good idea or not--are bearing that risk. And, because we're not charging an interest rate adequate to cover that risk, we are bearing more risk than a private lender.
By your standards, if I choose to charge you $10 for a meal I'm giving you money because if I wanted to, I could charge you $20. There is a difference between letting someone keep what they have and giving it back to them just like there is a difference between a low interest loan and a bailout.
Okay. If you charge me $10 for a meal, I end up +1 meal and -$10, and you end up -1 meal and +$10, right? But, if you charge me $20, I end up +1 meal and -$20, and you end up -1 meal and +$20, right?
So, in the first case, I have ten more dollars than in the second, and you have ten less, other than that, they are exactly the same. How is that ten dollars any different than $10 you just give me as a gift? It spends exactly the same, and has exactly the same utility to me.
If Tesla took out a loan from the private market at $100, they pay the private market $110, get $6 from the government, and the bank has $10 they didn't before, Tesla has $6 they wouldn't have otherwise, and the government has -$6.
No. The government doesn't have -$6; the taxpayers (you, I, and the private lenders) end up with -$6.
If Tesla takes out a loan from the government, they pay $104, still having the $6 they wouldn't have otherwise, and the Government now has $4.
No. The government could have lent out that money at 10%, on the open market. The government doesn't have $4, they have -$6; that's the opportunity cost of loaning the money out at below market rates. And, the taxpayer has to bear that cost.
Either way, the tax payer is giving Tesla $6.
If the government makes the loan, the government makes $4 and the private lender gets nothing.
It gets quite a bit more complicated here. If the government makes the loan, they don't make $4, they lose $6. Instead of loaning it to Tesla at below market rates, they could have entered the debt market and lent it to others at 10%. When they loan the money to Tesla, they lose $6, and Tesla gains $6.
If the government hands over $6 and sends Tesla to the private lender, the lender makes $10 and the government spends $6.
The lender doesn't net $10. The government has to recoup the $6 it spent through taxes, and some of that will come from the lender. Sure, the lender ends up with more money in this situation than in the other. But, someone in the economy has to come up with the $6.
It's the same from Tesla's POV, but not from anyone else's.
Well, certainly the private lender would prefer the second scenario. But the economic impact is the same in either: the government is out $6, and has to come up with that money from somewhere. Which one you pick depends upon who the government decides should be the "winner".
Yes, because every time a company underbids another to get a contract, that is equivalent to writing a check.
Exactly.
If Tesla needs a $100 loan for one year, and the market would charge 10% interest, but the government only charges 4%, then, at the end of the year, Tesla would have to repay the private debt holders $110, but would only have to repay the government $104. The government effectively gave Tesla $6. If, instead of loaning Tesla the money directly, the government just wrote Tesla a check for $6 and let them get the loan from the private debt market, the result would be exactly the same.
It works the same for companies competing for a contract, or consumers hunting for the best price. Let's say you want to buy a widget, and company A charges $100, and company B charges $90. If you buy the widget from company A, you have a widget and -$100. If you buy from B, you have a widget and -$90. So, if I buy a widget from B, I have $10 more than I would have had if I had bought from A. That $10 has identical utility to $10 paid by check.
So yes, the government is giving them money -- but it's still not a bailout.
If you define a bailout as money the government gives you to maintain your status as an ongoing concern, then you're probably right. Tesla says they don't need this money to remain in business, just to expand quicker. So, if it's not a bailout, it's simply a government subsidy, even though it's a loan, not a grant or preferential tax treatment.
It's a LOAN, not a bailout. You have to pay back loans.
The government is "giving" them the difference between the market interest rate, and the one the government would give them. If the market rate is 10%, and the government gives them the loan at 4%, the government is giving them the 6% difference as a handout. That's the equivalent of writing Tesla a check. It's a bailout.
I think people have discounted the buyback because, well... what else were they going to do with all that money. If you know the buyback is coming, it gets priced in almost right away. Also, I think MSFT trades less like a tech company, and more like a utility. Instead of focusing on growth, they have to grow their margins, which is tougher.
And so: why is its market capitalization at $172bn now, while it was at $300bn one year ago?
Two reasons:
The first is growth. MSFT isn't growing as fast as it once was. It's a mature company, and cannot sustain the rate of growth it once did. But, just because it isn't growing as quickly, does not mean that it is not growing and making money.
The second is that there simply isn't enough money in the stock market to sustain their previous stock price. The entire market is down 50% And, bear in mind that market cap is only very, very, loosely correlated with the strength of the underlying corporation.
Microsoft's market cap has nothing to do with its profitability (what I was originally commenting on). Microsoft continues to make money. Look at its balance sheet.
Their cash mountain has just about vanished though.
Are you talking about the $20 billion they currently have in the bank? Because, that seems like quite a mountain to me. Yes, it has gone down, but they're buying back billions of shares of their own stock. It's not like they're losing the money.
Its easy to say they are losing money. Q4 2008 net cashflow: $-2bn. Part of that loss was down to financing and investing activities.
Well, if they hadn't bought back $9 billion of their own stock, they would have had a net cashflow of +$7 billion. So, they're not losing money; they're buying back stock, something that has nothing to do with the strength (or lack thereof) of their business.
Microsoft are the richest corporation on the planet (to my knowledge) but their income is fading. They are losing money hand over fist for all sorts of reasons.
What are you talking about? Last year, MSFT's total revenue was $60 billion, compared to $51 billion for FY07. Gross profit was $48.8 billion versus $40.4 billion. And, net income was $17.7 billion versus $14 billion. Their income is not fading. And, they aren't losing money hand over fist.
If I say I have $1 M, NOBODY is going to think I mean thousand.
Well, that depends on who you're talking to. If you say that to an accountant, he might just think you mean thousand. A lot of corporation's financial filings have the M=thousand MM=million notation.
And now I know. Thanks.
Yeah, it should be. And, when actually using Roman numerals, it is. But, for some reason MM means million when used like this. Don't ask me why; it didn't make any sense the first time I heard about it.
It's from the Roman numeral for thousand: M. MM is a thousand thousand, or a million.
There is nothing from keeping anyone from getting access to these books the same way that Google did...
FTFA:
Since no such authorization is possible for orphan works, only Google would have access to them, so only Google could assemble a truly comprehensive book database.
It sounds like this settlement is what's preventing any potential competitor from getting access to these books the same way Google did.