Most insurance companies pay out nearly all the premiums that they take in. They make money through their investment portfolios by taking advantage of the timing difference between premium payment and claim time.
That is not really correct. Advertising is hardly an 'inefficiency' and it is not about tricking people into buying an inferior product. Advertising allows an individual to know more about the possible opportunities for them to allocate their capital. The advertised goods or services may result in greater utility derived than from spending on something else. For example if you see a certain holiday destination advertised it may result in greater enjoyment than would have been experienced if you went somewhere else.
Inefficiencies in capital markets are only derived from things like taxes and transaction costs. I suggest you re-read your microeconomic textbooks again!
I disagree, but my argument is that it really isn't easy for Microsoft to search out growth opportunities on a large scale. The console market seems to be one where Microsoft's size is a competitive advantage.
The amount of money we are talking about is peanuts anyway, $3bn is only 15% of one years cash flow for Microsoft.
All the other poster should be saying is that he doesn't believe the Xbox division will achieve a RoE that justifies it. That's fine if he believes that. But he shouldn't be saying that Microsoft is doing something wrong by keeping the division going...if they believe the RoE is there then they are totally doing the right thing by keeping the division going! This is what I am arguing against. Microsoft aren't doing anything wrong -- it is just that their views differ.
I suspect that he wouldn't have a clue what sort of growth Xbox can achieve, and what boost it can provide to other products Microsoft provides. That's why I would probably side with Microsoft here.
Firstly, revenues don't get paid out from revenues, they get paid from after tax profit.
Secondly shutting down a division after absorbing the sunk cost of setting it up would upset a number of shareholders as you have effectively thrown away those 'billions of dollars'. They've set up a division that is now profitable and that you could pretty easily justify the good growth in that profit given the product which they have in the market.
If you were a shareholder given your attitude you would have dumped your stock on announcement of the xbox project. If, on the other hand, you were an investor that wanted Microsoft to pursue growth options and effectively use their capital at hand you would support the xbox project.
But your argument of shutting it down now makes no sense what so ever. If you were a shareholder that just wanted no growth and big dividends you would have sold out already, but if you are still in there and only complaining NOW when the division is turning a profit, anyone would look at you thinking "what the hell is this guy on about?"
Going cash-flow positive for a year or so doesn't make it profitable, it makes it potentially profitable if and only if that positive cash flow persists until the investment is recouped.
-jcr
This is exactly what investment is all about. But what you fail to understand is that not only will the profit persist, but it will probably grow. I couldn't think of a project set up by any company that didn't require up front sunk cost to implement. The fun in financial modeling is getting the future cash flows positive so that there is a positive return on initial investment. Microsoft seem to be making that happen. As a shareholder, I would be happy with that outcome.
If you want to treat it entirely from an unbiased viewpoint, try and form your opinion on how much you think a major worldwide environmental disaster would cost (in dollars and lives) versus giving up a little bit now.
I'm not trying to convince you either way, as I'm actually undecided. I don't have enough information to accurately judge whether we even make a difference to our environment. It seems that a lot of people believe that there is enough info out there. Even if it doesn't turn out to be true, it seems to me that it is a pretty cheap insurance policy...some governments are even trying to reimburse consumers for the extra cost. The Australian government is doing this.
All I'm saying is that carbon credits are a pretty good mix of capitalist values and green values. If most people say that they want to save the environment, then this is probably going to be the way forward. If you don't believe it, get out there and petition!
You clearly don't understand what the purpose of carbon credits is and how they work.
Yes, regulation in any industry is likely to raise the price paid by consumers. But in this case it is a necessary evil if you want the benefit of having a cleaner environment.
the fact is that dirty coal is going to be cheaper than alternative energies for a VERY long time to come because we have so much of it. If our goal was to keep electricity as cheap as possible, we would burn coal and use hydro and nothing else. Hydro isn't actually as clean as you may think. The process kills off the lakes and estuaries that run from the dam.
Unfortunately (which you don't seem to realise) is that due to the bad effect on the environment we need to come up with some way that makes it more cost competitive to use cleaner technology and to eliminate the use of dirtier technologies.
Now, if you care for the environment you would want this to happen. But you can't just get rid of coal because we would be left with no electricity. The carbon credit scheme balances out the effect on these produces by supplying a grant of credits that makes up for the reduction in competitiveness of their power plants. Power will now be more expensive for them to produce, making cleaner tech more appealing.
Enron came up with the idea, only with the desire to be the trading centre for these credits. Trading was the one thing Enron was actually good at.
In short, if you care for the environment you won't mind paying more for electricity. If you don't then rebel your heart out. The parent to your comment was correct, you made yourself look foolish with lack of information.
Ha. That is an extremely weak way to get out of answering back a very well thought out response. I guess you had no rebuttal? Picking on spelling has also made you look worse. I didn't realise there was rules on how many spelling mistakes are allowed?
In my recent around the world trip, I had to pay attention to the different type of currency I was dealing with every day.
By far the worst was US currency. Tough to tell which was which without pulling it out and looking at it, and generally it was of poor quality too, especially the $1 notes. I was relieved when I got some $1 coins but they were few and far between.
Even Croatian currency was much easier to deal with. Different colours and sizes made it easy. I found the euro and pound to be ok, but they were too large of a size to fit in my wallet properly. This seemed to be a common porblem because they were always ripped on the ends indicating that it wasn't only me with this issue.
Still the best currency I have dealt with is Australian currency. It is made of plastic so it always in great shape and was in distinctly different colours and sizes to make it easy to use. It was small enough to fit in any wallet too. Must be a hard currency to counterfeit because of the clear plastic windows and such. I find it hard to believe the largest economy in the world can't change to this new technology!
You can use iTunes on win 64. It should install normally and work fine with the exception of the cd burning. To fix this you need to download the 64bit version of the gear drivers and copy them over the apple provided ones. It will then work.
They did not 'lose' $220m in real cash, only the market value of the company was rerated by the market at $220m less than it was previously. The only people that lost that money were the investors as a whole.
It doesn't matter! The entrepeneurial profits stay in America. Also remember there are a whole lot of other people employed by these companies within the country of origin: engineers, accountants and all the rest of the business support staff (IT etc).
You cannot blame anyone for allocating their income to any one good - no matter what their reasons maybe.
I agree. Mergers are bad for the enconomy if they produce a monopoly. Most mergers that do produce a monopoly are frequently denied (well in Australia anyway) by the government.
Some mergers however can cause two small companies to better rival a large more dominant one. In this case a merger is beneficial! What happens when a big company crushes two smaller ones through competition. What happens to ALL the employees in the small companies then?
The shareholders are the owners of the company. They do what they want to do with their company. Most good companies realise that most value is drawn from good employees. They try hard to keep the good ones. If you start introducing protectionist laws to stop people from getting fired, all you would do is discourage companies from taking risks in new ventures, stop hiring risky employees (like young people), and all in all raise the prices of their products (as the price of employees will have gone up substantially. Oh also you are forcing companies to go and look overseas for employees. Nobody wants that.
I think Slashdot is probably the worst site to find people educated on economic matters.
1. The participants in the market price a company through its share price. Participants are greatly influenced by analysts.
2. Analysts don't 'predict the future' what a stock will do. They provide a valuation of company based on current assets and a dollar value on future growth and opportunities. Sure the analysts may get the valuation wrong, but all that means is that the share price will be bought up to this false valuation, then sold down to the true one when it comes out!
3. NOTHING HAPPENS TO THE COMPANY!!! The company doesn't get 'pummelled'. The current share price does not affect the running of the company at all.
All that is happening is that the share price gets bidded up on false expectations, and situations which arise from that. The analysts have done nothing wrong; they worked with the best information they had at the time. And yes, they lose their jobs if the get it wrong too often.
Where does fear and uncertainty come into this? People make investments by buying a part of a company that they believe has growth in its future (lets use an example of BridgeCo, a bridge building company). Executing this trade is something that an investor pays for because its the only way they can get into the investment.
As you can probably guess, I am in the industry. But do you know where my roots are in? I did mathematics and computer science at university.
You have to learn not to discount other trades other than your own. You'd be surprised where the money from that bridge comes from. I can guarantee you its rarely from 1 investor.
Sorry I should have explained further. In Australia they are called 'SEATS operators', SEATS being the name of the matching system that is used at the ASX. An operator works at a brokerage house and is actually responsible for physically trading the stocks on the behalf of the investor.
They have to be very quick because their performance is based on getting the best price for their client. Being quick and taking advantage of a good market condition makes you a better operator. He probably does millions of dollars worth of trading in a day. This is but one small mistake.
Although judging by the tone of your comment you are not interested to hear that these people are very smart and add alot of value through experience and knowledge.
The TSE doesn't allow cancellation of trades. Also they have a stupid 15% max movement in a day which saved Mizuho here.
This has happened before in the Japanese market, and it is losing credibility because it allows simple mistakes like this to happen. All they are doing is killing liquidity in their own market.
He was hardly a monkey. Good operators in any market get paid upwards of hundreds of thousands of dollars a year for their trading expertise, and are very quick and smart.
Slashdot Mirror
Tie Fighter was better, and it came after!
Most insurance companies pay out nearly all the premiums that they take in. They make money through their investment portfolios by taking advantage of the timing difference between premium payment and claim time.
Exactly. Intel is known as one of the few corporates who actually ramp up R&D in a down cycle, with the hope of capturing market share on the way out.
If you are interested there is a video of the CFO explaining their R&D philosophy on the Intel website.
That is not really correct. Advertising is hardly an 'inefficiency' and it is not about tricking people into buying an inferior product. Advertising allows an individual to know more about the possible opportunities for them to allocate their capital. The advertised goods or services may result in greater utility derived than from spending on something else. For example if you see a certain holiday destination advertised it may result in greater enjoyment than would have been experienced if you went somewhere else.
Inefficiencies in capital markets are only derived from things like taxes and transaction costs. I suggest you re-read your microeconomic textbooks again!
I disagree, but my argument is that it really isn't easy for Microsoft to search out growth opportunities on a large scale. The console market seems to be one where Microsoft's size is a competitive advantage.
The amount of money we are talking about is peanuts anyway, $3bn is only 15% of one years cash flow for Microsoft.
All the other poster should be saying is that he doesn't believe the Xbox division will achieve a RoE that justifies it. That's fine if he believes that. But he shouldn't be saying that Microsoft is doing something wrong by keeping the division going...if they believe the RoE is there then they are totally doing the right thing by keeping the division going! This is what I am arguing against. Microsoft aren't doing anything wrong -- it is just that their views differ.
I suspect that he wouldn't have a clue what sort of growth Xbox can achieve, and what boost it can provide to other products Microsoft provides. That's why I would probably side with Microsoft here.
Firstly, revenues don't get paid out from revenues, they get paid from after tax profit.
Secondly shutting down a division after absorbing the sunk cost of setting it up would upset a number of shareholders as you have effectively thrown away those 'billions of dollars'. They've set up a division that is now profitable and that you could pretty easily justify the good growth in that profit given the product which they have in the market.
If you were a shareholder given your attitude you would have dumped your stock on announcement of the xbox project. If, on the other hand, you were an investor that wanted Microsoft to pursue growth options and effectively use their capital at hand you would support the xbox project.
But your argument of shutting it down now makes no sense what so ever. If you were a shareholder that just wanted no growth and big dividends you would have sold out already, but if you are still in there and only complaining NOW when the division is turning a profit, anyone would look at you thinking "what the hell is this guy on about?"
Going cash-flow positive for a year or so doesn't make it profitable, it makes it potentially profitable if and only if that positive cash flow persists until the investment is recouped.
-jcr
This is exactly what investment is all about. But what you fail to understand is that not only will the profit persist, but it will probably grow. I couldn't think of a project set up by any company that didn't require up front sunk cost to implement. The fun in financial modeling is getting the future cash flows positive so that there is a positive return on initial investment. Microsoft seem to be making that happen. As a shareholder, I would be happy with that outcome.
They threatened to cut of your balls because you didn't pay your insurance?
Or maybe you meant incarceration?
Not at all, I was just explaining how they work.
If you want to treat it entirely from an unbiased viewpoint, try and form your opinion on how much you think a major worldwide environmental disaster would cost (in dollars and lives) versus giving up a little bit now.
I'm not trying to convince you either way, as I'm actually undecided. I don't have enough information to accurately judge whether we even make a difference to our environment. It seems that a lot of people believe that there is enough info out there. Even if it doesn't turn out to be true, it seems to me that it is a pretty cheap insurance policy...some governments are even trying to reimburse consumers for the extra cost. The Australian government is doing this.
All I'm saying is that carbon credits are a pretty good mix of capitalist values and green values. If most people say that they want to save the environment, then this is probably going to be the way forward. If you don't believe it, get out there and petition!
You clearly don't understand what the purpose of carbon credits is and how they work.
Yes, regulation in any industry is likely to raise the price paid by consumers. But in this case it is a necessary evil if you want the benefit of having a cleaner environment.
the fact is that dirty coal is going to be cheaper than alternative energies for a VERY long time to come because we have so much of it. If our goal was to keep electricity as cheap as possible, we would burn coal and use hydro and nothing else. Hydro isn't actually as clean as you may think. The process kills off the lakes and estuaries that run from the dam.
Unfortunately (which you don't seem to realise) is that due to the bad effect on the environment we need to come up with some way that makes it more cost competitive to use cleaner technology and to eliminate the use of dirtier technologies.
Now, if you care for the environment you would want this to happen. But you can't just get rid of coal because we would be left with no electricity. The carbon credit scheme balances out the effect on these produces by supplying a grant of credits that makes up for the reduction in competitiveness of their power plants. Power will now be more expensive for them to produce, making cleaner tech more appealing.
Enron came up with the idea, only with the desire to be the trading centre for these credits. Trading was the one thing Enron was actually good at.
In short, if you care for the environment you won't mind paying more for electricity. If you don't then rebel your heart out. The parent to your comment was correct, you made yourself look foolish with lack of information.
Ha. That is an extremely weak way to get out of answering back a very well thought out response. I guess you had no rebuttal? Picking on spelling has also made you look worse. I didn't realise there was rules on how many spelling mistakes are allowed?
That was very clever, I don't think anyone got it
By far the worst was US currency. Tough to tell which was which without pulling it out and looking at it, and generally it was of poor quality too, especially the $1 notes. I was relieved when I got some $1 coins but they were few and far between.
Even Croatian currency was much easier to deal with. Different colours and sizes made it easy. I found the euro and pound to be ok, but they were too large of a size to fit in my wallet properly. This seemed to be a common porblem because they were always ripped on the ends indicating that it wasn't only me with this issue.
Still the best currency I have dealt with is Australian currency. It is made of plastic so it always in great shape and was in distinctly different colours and sizes to make it easy to use. It was small enough to fit in any wallet too. Must be a hard currency to counterfeit because of the clear plastic windows and such. I find it hard to believe the largest economy in the world can't change to this new technology!
One of the greatest games ever made.
You can use iTunes on win 64. It should install normally and work fine with the exception of the cd burning. To fix this you need to download the 64bit version of the gear drivers and copy them over the apple provided ones. It will then work.
You cannot blame anyone for allocating their income to any one good - no matter what their reasons maybe.
Some mergers however can cause two small companies to better rival a large more dominant one. In this case a merger is beneficial! What happens when a big company crushes two smaller ones through competition. What happens to ALL the employees in the small companies then?
The shareholders are the owners of the company. They do what they want to do with their company. Most good companies realise that most value is drawn from good employees. They try hard to keep the good ones. If you start introducing protectionist laws to stop people from getting fired, all you would do is discourage companies from taking risks in new ventures, stop hiring risky employees (like young people), and all in all raise the prices of their products (as the price of employees will have gone up substantially. Oh also you are forcing companies to go and look overseas for employees. Nobody wants that.
God I hate protectionists
1. The participants in the market price a company through its share price. Participants are greatly influenced by analysts.
2. Analysts don't 'predict the future' what a stock will do. They provide a valuation of company based on current assets and a dollar value on future growth and opportunities. Sure the analysts may get the valuation wrong, but all that means is that the share price will be bought up to this false valuation, then sold down to the true one when it comes out!
3. NOTHING HAPPENS TO THE COMPANY!!! The company doesn't get 'pummelled'. The current share price does not affect the running of the company at all.
All that is happening is that the share price gets bidded up on false expectations, and situations which arise from that. The analysts have done nothing wrong; they worked with the best information they had at the time. And yes, they lose their jobs if the get it wrong too often.
As you can probably guess, I am in the industry. But do you know where my roots are in? I did mathematics and computer science at university.
You have to learn not to discount other trades other than your own. You'd be surprised where the money from that bridge comes from. I can guarantee you its rarely from 1 investor.
They have to be very quick because their performance is based on getting the best price for their client. Being quick and taking advantage of a good market condition makes you a better operator. He probably does millions of dollars worth of trading in a day. This is but one small mistake.
Although judging by the tone of your comment you are not interested to hear that these people are very smart and add alot of value through experience and knowledge.
This has happened before in the Japanese market, and it is losing credibility because it allows simple mistakes like this to happen. All they are doing is killing liquidity in their own market.
He was hardly a monkey. Good operators in any market get paid upwards of hundreds of thousands of dollars a year for their trading expertise, and are very quick and smart.