Your last point is correct, companies almost never sell all their shares to the public (some trusts sell all shares in an effort to buy a large asset). Google's founders, employees, and venture capitalists will be holding about 90% of Google's shares. The $2 billion likely uses the $108 price, rounds down, and subtracts the underwriter's fees (usually 6%-7% in Google's case rumored to be 3%-4%). You would have to check the filing but I think Google currently has about 260 million shares outstanding (Pre IPO).
One of the reasons tech companies get tremendous valuations is that they have very limited floats (total number of shares less number of shares off the market in the hands of insiders and other large shareholders). As a result the price is set on only a small portion of the total shares. I'm surprised they don't split 3-1 and bring the per share price out of the stratosphere given their stated focus on idividuals (fund's prefer high share prices, retail investors prefer lower share prices).
IANAL, but have known companies targeted by similar actions. My understanding of the decisions is that if you have radio stations available for your employees you would be covered by their royalty payments. However, if the ASCAP (or international versions of the same) can show that the music was played for customer entertainment you have to pay royalties. The tricky part is places like dentist offices, retail establishments, places where customers and employees occupy the same space. Small diners were targeted several years ago in the US.
When he started TBS he was a near bankrupt billboard salesguy (I think it was a failing Atlanta UHF station that a relative gave him for a song. A billion dollars with Ted Turner backing it would no doubt get some external investment if he really wanted to play, look at Edgar Bronfonmann's music gambit (I don't think he had $1 billion of his own capital for that deal).
Times-Mirror, Tribune, and Knight-Ridder all own a bunch of papers. However even the independant papers get most national news from one of only a few wire services (AP, Reuters, etc).
I've always heard it in the context of the grandparent (something close to peddling), however a quick dictionary search indicates that the correct definition is to carry clumsily; to move slowly or laboriously; an ardurous journey; or a clumsy or stupid person. I guess the selling crap around the globe was taken from one of the first two definitions. I wonder if it's regional (east cost usage indicates a journey western usage to carry a lot of heavy crap and sell it on a trip. I guess you learn something everyday.
Yeah, WiFi is developed for US open frequencies. That's why GSM phones don't work here and there unless they are special. The US reserves 800 MHz for GSM and 900 MHz for military communication. Europe does the opposite. I think both use 1900 MHz, but there could be issues there as well.
Know thine enimes. Not Trippi, Dean. The guy was invigorating the left wing of the party for the first time in years, but the current powers that be in the DNC are much more moderate FOBs. So they pushed him out of the way. I'm still surprised that given all the talk of anybody but Bush that the Kerry Edwards ticket isn't reversed (Edwards polled very well with independants and "swing" voters.
The Senate will be killing that bill in committee, the house is where hot headed bills like that get passed. I agree that the economy is a bit cooler than most in power will admit but Greenspan's testimony today was a much bigger driver of perceptions that MS cash return (they've been telegraphing this for more than a year).
The timing is more a result of two factors. First there is a healthy chance that Kerry will win the election and pull the dividend tax cut. Getting the deal done now means that something like 8 billion of the 30 doesn't go to Washington. Also interest rates are at 40 year lows and very likely to head higher in the next year. MS cash is mostly in short and long term bonds which have gone way up in value as interest rates declined and would go way down in value if interest rates rose. So they decided the timing was right and got the cash out to owners while bond values would still be high and taxes wouldn't get charged.
MS may be big on the stock market, but the IBMs and HPs of the tech world have a much bigger effect on the economy since they employ so many more people.
IBM beat the US government in an anti-trust trial. The US government who has a virtually unlimited budget for lawyers and investigators. Why a 20 man operation decided to try to sue them and hoped to be successful, I'll never know.
I'm getting one so I don't have to get up and grab a different disk for my XBox. I have a small apartment and the discs will be in a storage area freeing up a bunch of pretty useful entertainment center space. Also so I can stream my music collection to the X-Box (entirely ripped from CD's I own (except this one song that I can't find on CD--I guess I'll fire up the ITMS and see if it's there).
The company everyone loves to hate from Redmond did just that with SQL server. Oracle responded by some price cuts (mostly on large negotiated deals) and supporting linux on intel rather than Solaris on SUN. this lowered the total cost of an oracle database, rather than a $25,000 server and a $25,000 database they began pushing a $5,000 server and a $25,000 database.
Eventually a company like SAP or Siebel will begin supporting (and contributing signficant coding resources to one or more open source data bases to lower the cost of a SAP (on Oracle on Linux on x86) system by replacing it with an SAP (on SAP DB on Linux on x86) and oracle will begin struggling. Oracle is still pretty pricy, but from what I've seen they are the gold standard of commercial databases (DB2 is mostly on mainframes and SQL server is confined to Windows).
Concentrations of wealth can be bad, and the US is more or less in the middle on concentration of wealth. The UN publishes statistics on this (look for the Gini coef. for more info on wealth concentration. The progressive Scandinavian nations are more equal, places like Brazil are much worse. The problems arise when the super rich don't fund economic wealth they hoard it in assets that are non productive (like land in Brazil) or stash it in Swiss bank accounts.
That said, I think it would be more efficent to have no income taxes and raise necessary tax revenues from inheritance taxes, but it's all a matter of how well the inherited wealth goes to producing economic growth. If trust fund babies own venture capital great, if they own foreign bonds that's bad.
I think it's more that they can't buy anything with that much money, and spending an additional 10 billion/yr on R&D would be difficult to impliment in the next decade. By and large shareholders have been screaming for the cash for several years and the company has been stalling saying that they need it for court cases and settlements with the hatchet "sold" to Europe and SUN (Larry's words) and most states settling for small amounts of cash. They have no excuses not to give the cash back to shareholders. Also the switch to stock grants from options means that the cash doesn't boost executive pay and the big shareholders get a nice bit of income.
Usually companies that are over capitalized trade down after the dividend goes ex (meaning that you get the dividend if you own it on a certain day). People were generally already pricing the cash into the stock (usually looking at earnings over enterprise value (no cash). The buyback plan isn't really that much bigger than their old one that let shares grow slowly (figure that 1/3 or so of that will actually reduce shares--I'll let you do the math).
The problem with that is that cable companies would each have to charge considerably more (ESPN gets about $2/mo from everyone others get up to $1 or so CSPAN and the house version get about a nickel). They survive with pricing like that because the cable company bundles them together. With full ala carte pricing ESPN would be one of the cheaper channels (due to it's higher popularity) and niche channels would probably be more like $5-$10 each. Meaning that you could only pay for the channels you watch but you would still pay $50 per month.
I think the reason for a 500W PS is that companies rate PS differently. One company's 500W supply might be able to peak at 500W, but only output 250-300 cleanly. I'd guess it's a lot like stereo amps where boom boxes list peak wattage (on a sunny day in ND with no wind) while a company like NAD rates its applifier's wattage based on how much power it can pump without exceeding a certain deviation from the input signal. So a 65W NAD amp might be considerably louder than a 300W Walmart special.
Perhaps it's less a matter of ability, effort, or inteligence rather a matter of time. I would guess that a signficantly higher percentage of Indians spoke fluent english 10 years ago than Chinese. As a result early software and service outsourcing required a reliance on english speech for most works while manufacturing only required a small group of sales people or executives to be fluent, which resulted in China specializing in manufacturing and India in phone calls, software development, and other services. 10-20 years from now, likely many more Asians will speak English (while more Americans will speak Mandarin or Hindi).
I had some friends in college that developed such a machine in college, the problem for their product in the fast food industry is that it's even cheaper to put the pop machine on the other side of the counter and let the customer fill it for free. That said the movie was interesting and good, although I never read the books.
I'd say that the problem isn't that all manager's turn into those things, rather that too many people in management are in way over their heads and end up that way. I'd rather see more engineers and scientists going back to get an MBA and run companies with some level of logic. My understanding is that most Germain compaies management teams are filled with engineers, and they seem to be quite successful building wonderful products. I'm in firm agreement that good managers are always found not created, the only thing I learned in the required management class was a bit about quality control techniques.
He makes a good point from a value side of investing. I like the distinction that both growth and value investors are concerned with P/E ratios. Value investors are concerned with the P (or price they pay for earnings). Growth investors are concernd with the E (or future E prospects). Niether side is entirely correct, and both can be good frameworks for understanding a very complex set of information. The grandparents point is effectively that MS is still too expensive for most value investors to consider (look at a company like Borland (or a fiber company three years ago) for something that is closer to their crackers and mustard), but MS is suffering from the oft incorrectly cited rule of large numbers that makes it difficult to continue to excite growth investors. This suggests a considerable amount of pain is due for shareholders before folk like Buffet are interested in the company, if growth investors decide it is far too staid for their portfolios.
Your life time earnings look about right, although that statistic would be jsut as true (if not worse for most software comapnies). Keep in mind that Wall St looks forward not backward and has basically two models for how a company is operating value and growth. The value companies are generally companies that aren't growing earnings and are valued based on some accepted discount of the future stream of earnings (or dividends) (usually P/Es of 10x current EPS, so a company with a $1 in EPS would be worth $10). Dividend yields are usally in the >3% range for straight value companies. The second model is growth companies, in that case management's job is to sell the prospects of future growth and allow optimists to expect EPS to increase at a rapid rate. If successful you can get away with anything from 20-50x EPS (normally) usually the P/E can get to about twice the expected growth rate. What is affecting Microsoft is that they are moving from a growth company to a value company.
The dilution is a big reason MS is switching to stock grants, you give away fewer shares with more value attached to each share (ie rather than an option with market value of say $5-$10 you give 1/2 as many shares with a market value of $27ish).
You seem to have grasped one of the more difficult lessons most lay investors have to learn, that a good investment results in finding disparity between the actual prospects of a company and the percieved prospects of a company, not just investing in the most successful companies.
Although I do feel the need to point out that none of MS revenues come from investments, revenues come from products that are sold, only payroll companies and banks record investment income as revenues. MS got about 10% of their income from investment income and gains over the past 6 years.
That show was made by the quirky side kicks he had. Oddly, the gal who hosted the later episodes had a Chemical Engineering degree from a pretty good school.
I think you are correct also based on my extensive knowledge of Quizshow, but I'm curious why there was a congressional investigation into a television game show? It's good TV, why does it matter (legally or not) if it's fixed? Sure Pro Wrestling isn't the Olympics (not that they aren't just as corrupt) but it remains a fairly popular entertainment medium? Why was/is it so important?
Slashdot Mirror
Your last point is correct, companies almost never sell all their shares to the public (some trusts sell all shares in an effort to buy a large asset). Google's founders, employees, and venture capitalists will be holding about 90% of Google's shares. The $2 billion likely uses the $108 price, rounds down, and subtracts the underwriter's fees (usually 6%-7% in Google's case rumored to be 3%-4%). You would have to check the filing but I think Google currently has about 260 million shares outstanding (Pre IPO).
One of the reasons tech companies get tremendous valuations is that they have very limited floats (total number of shares less number of shares off the market in the hands of insiders and other large shareholders). As a result the price is set on only a small portion of the total shares. I'm surprised they don't split 3-1 and bring the per share price out of the stratosphere given their stated focus on idividuals (fund's prefer high share prices, retail investors prefer lower share prices).
IANAL, but have known companies targeted by similar actions. My understanding of the decisions is that if you have radio stations available for your employees you would be covered by their royalty payments. However, if the ASCAP (or international versions of the same) can show that the music was played for customer entertainment you have to pay royalties. The tricky part is places like dentist offices, retail establishments, places where customers and employees occupy the same space. Small diners were targeted several years ago in the US.
When he started TBS he was a near bankrupt billboard salesguy (I think it was a failing Atlanta UHF station that a relative gave him for a song. A billion dollars with Ted Turner backing it would no doubt get some external investment if he really wanted to play, look at Edgar Bronfonmann's music gambit (I don't think he had $1 billion of his own capital for that deal).
Times-Mirror, Tribune, and Knight-Ridder all own a bunch of papers. However even the independant papers get most national news from one of only a few wire services (AP, Reuters, etc).
I've always heard it in the context of the grandparent (something close to peddling), however a quick dictionary search indicates that the correct definition is to carry clumsily; to move slowly or laboriously; an ardurous journey; or a clumsy or stupid person. I guess the selling crap around the globe was taken from one of the first two definitions. I wonder if it's regional (east cost usage indicates a journey western usage to carry a lot of heavy crap and sell it on a trip. I guess you learn something everyday.
MS has been spending $5-$10 billion/yr on stock buybacks for more than 5 years.
Yeah, WiFi is developed for US open frequencies. That's why GSM phones don't work here and there unless they are special. The US reserves 800 MHz for GSM and 900 MHz for military communication. Europe does the opposite. I think both use 1900 MHz, but there could be issues there as well.
Know thine enimes. Not Trippi, Dean. The guy was invigorating the left wing of the party for the first time in years, but the current powers that be in the DNC are much more moderate FOBs. So they pushed him out of the way. I'm still surprised that given all the talk of anybody but Bush that the Kerry Edwards ticket isn't reversed (Edwards polled very well with independants and "swing" voters.
The Senate will be killing that bill in committee, the house is where hot headed bills like that get passed. I agree that the economy is a bit cooler than most in power will admit but Greenspan's testimony today was a much bigger driver of perceptions that MS cash return (they've been telegraphing this for more than a year).
The timing is more a result of two factors. First there is a healthy chance that Kerry will win the election and pull the dividend tax cut. Getting the deal done now means that something like 8 billion of the 30 doesn't go to Washington. Also interest rates are at 40 year lows and very likely to head higher in the next year. MS cash is mostly in short and long term bonds which have gone way up in value as interest rates declined and would go way down in value if interest rates rose. So they decided the timing was right and got the cash out to owners while bond values would still be high and taxes wouldn't get charged.
MS may be big on the stock market, but the IBMs and HPs of the tech world have a much bigger effect on the economy since they employ so many more people.
IBM beat the US government in an anti-trust trial. The US government who has a virtually unlimited budget for lawyers and investigators. Why a 20 man operation decided to try to sue them and hoped to be successful, I'll never know.
I'm getting one so I don't have to get up and grab a different disk for my XBox. I have a small apartment and the discs will be in a storage area freeing up a bunch of pretty useful entertainment center space. Also so I can stream my music collection to the X-Box (entirely ripped from CD's I own (except this one song that I can't find on CD--I guess I'll fire up the ITMS and see if it's there).
The company everyone loves to hate from Redmond did just that with SQL server. Oracle responded by some price cuts (mostly on large negotiated deals) and supporting linux on intel rather than Solaris on SUN. this lowered the total cost of an oracle database, rather than a $25,000 server and a $25,000 database they began pushing a $5,000 server and a $25,000 database.
Eventually a company like SAP or Siebel will begin supporting (and contributing signficant coding resources to one or more open source data bases to lower the cost of a SAP (on Oracle on Linux on x86) system by replacing it with an SAP (on SAP DB on Linux on x86) and oracle will begin struggling. Oracle is still pretty pricy, but from what I've seen they are the gold standard of commercial databases (DB2 is mostly on mainframes and SQL server is confined to Windows).
Yeah but if the dollar keeps falling realitve to the Austrialian Dollar 5% in another currency might not look to bad to an American.
Concentrations of wealth can be bad, and the US is more or less in the middle on concentration of wealth. The UN publishes statistics on this (look for the Gini coef. for more info on wealth concentration. The progressive Scandinavian nations are more equal, places like Brazil are much worse. The problems arise when the super rich don't fund economic wealth they hoard it in assets that are non productive (like land in Brazil) or stash it in Swiss bank accounts.
That said, I think it would be more efficent to have no income taxes and raise necessary tax revenues from inheritance taxes, but it's all a matter of how well the inherited wealth goes to producing economic growth. If trust fund babies own venture capital great, if they own foreign bonds that's bad.
I think it's more that they can't buy anything with that much money, and spending an additional 10 billion/yr on R&D would be difficult to impliment in the next decade. By and large shareholders have been screaming for the cash for several years and the company has been stalling saying that they need it for court cases and settlements with the hatchet "sold" to Europe and SUN (Larry's words) and most states settling for small amounts of cash. They have no excuses not to give the cash back to shareholders. Also the switch to stock grants from options means that the cash doesn't boost executive pay and the big shareholders get a nice bit of income.
Usually companies that are over capitalized trade down after the dividend goes ex (meaning that you get the dividend if you own it on a certain day). People were generally already pricing the cash into the stock (usually looking at earnings over enterprise value (no cash). The buyback plan isn't really that much bigger than their old one that let shares grow slowly (figure that 1/3 or so of that will actually reduce shares--I'll let you do the math).
The problem with that is that cable companies would each have to charge considerably more (ESPN gets about $2/mo from everyone others get up to $1 or so CSPAN and the house version get about a nickel). They survive with pricing like that because the cable company bundles them together. With full ala carte pricing ESPN would be one of the cheaper channels (due to it's higher popularity) and niche channels would probably be more like $5-$10 each. Meaning that you could only pay for the channels you watch but you would still pay $50 per month.
I think the reason for a 500W PS is that companies rate PS differently. One company's 500W supply might be able to peak at 500W, but only output 250-300 cleanly. I'd guess it's a lot like stereo amps where boom boxes list peak wattage (on a sunny day in ND with no wind) while a company like NAD rates its applifier's wattage based on how much power it can pump without exceeding a certain deviation from the input signal. So a 65W NAD amp might be considerably louder than a 300W Walmart special.
Perhaps it's less a matter of ability, effort, or inteligence rather a matter of time. I would guess that a signficantly higher percentage of Indians spoke fluent english 10 years ago than Chinese. As a result early software and service outsourcing required a reliance on english speech for most works while manufacturing only required a small group of sales people or executives to be fluent, which resulted in China specializing in manufacturing and India in phone calls, software development, and other services. 10-20 years from now, likely many more Asians will speak English (while more Americans will speak Mandarin or Hindi).
I had some friends in college that developed such a machine in college, the problem for their product in the fast food industry is that it's even cheaper to put the pop machine on the other side of the counter and let the customer fill it for free. That said the movie was interesting and good, although I never read the books.
I'd say that the problem isn't that all manager's turn into those things, rather that too many people in management are in way over their heads and end up that way. I'd rather see more engineers and scientists going back to get an MBA and run companies with some level of logic. My understanding is that most Germain compaies management teams are filled with engineers, and they seem to be quite successful building wonderful products. I'm in firm agreement that good managers are always found not created, the only thing I learned in the required management class was a bit about quality control techniques.
He makes a good point from a value side of investing. I like the distinction that both growth and value investors are concerned with P/E ratios. Value investors are concerned with the P (or price they pay for earnings). Growth investors are concernd with the E (or future E prospects). Niether side is entirely correct, and both can be good frameworks for understanding a very complex set of information.
The grandparents point is effectively that MS is still too expensive for most value investors to consider (look at a company like Borland (or a fiber company three years ago) for something that is closer to their crackers and mustard), but MS is suffering from the oft incorrectly cited rule of large numbers that makes it difficult to continue to excite growth investors. This suggests a considerable amount of pain is due for shareholders before folk like Buffet are interested in the company, if growth investors decide it is far too staid for their portfolios.
Your life time earnings look about right, although that statistic would be jsut as true (if not worse for most software comapnies). Keep in mind that Wall St looks forward not backward and has basically two models for how a company is operating value and growth. The value companies are generally companies that aren't growing earnings and are valued based on some accepted discount of the future stream of earnings (or dividends) (usually P/Es of 10x current EPS, so a company with a $1 in EPS would be worth $10). Dividend yields are usally in the >3% range for straight value companies.
The second model is growth companies, in that case management's job is to sell the prospects of future growth and allow optimists to expect EPS to increase at a rapid rate. If successful you can get away with anything from 20-50x EPS (normally) usually the P/E can get to about twice the expected growth rate. What is affecting Microsoft is that they are moving from a growth company to a value company.
The dilution is a big reason MS is switching to stock grants, you give away fewer shares with more value attached to each share (ie rather than an option with market value of say $5-$10 you give 1/2 as many shares with a market value of $27ish).
You seem to have grasped one of the more difficult lessons most lay investors have to learn, that a good investment results in finding disparity between the actual prospects of a company and the percieved prospects of a company, not just investing in the most successful companies.
Although I do feel the need to point out that none of MS revenues come from investments, revenues come from products that are sold, only payroll companies and banks record investment income as revenues. MS got about 10% of their income from investment income and gains over the past 6 years.
That show was made by the quirky side kicks he had. Oddly, the gal who hosted the later episodes had a Chemical Engineering degree from a pretty good school.
I think you are correct also based on my extensive knowledge of Quizshow, but I'm curious why there was a congressional investigation into a television game show? It's good TV, why does it matter (legally or not) if it's fixed? Sure Pro Wrestling isn't the Olympics (not that they aren't just as corrupt) but it remains a fairly popular entertainment medium? Why was/is it so important?