Archive for 2007

  • Gates and Jobs Joint Appearance
    , May 31st, 2007 at 10:41 am

    I noticed this sentence in the San Jose Mercury‘s story on yesterday’s joint appearance by Bill Gates and Steve Jobs:

    On a personal level, Jobs and Gates were good enough friends in the 1980s to double date occasionally and for Gates to leave friendly prank calls on Jobs’ answering machine.

    Am I the only one who wants to hear the girls’ account of the evening?

  • Surowiecki on Chrysler
    , May 31st, 2007 at 10:34 am

    In the latest New Yorker, James Surowiecki looks at Cerebus’ purchase of Chrysler. He says that “legacy costs” are a problem, but not the only problem.

    A 2006 report by the Harbour-Felax Group, a well-respected automotive-industry analyst, concluded that in 2005 Chrysler’s health-care costs were about eleven hundred dollars more per vehicle than Toyota’s. But even if that gap were closed Chrysler and other U.S. automakers would be far less profitable and would be growing more slowly than their foreign competitors. Ultimately, American manufacturers sell too few cars for too little money, and have to offer too many incentives—thousands in cash back or low-interest financing—on the vehicles they do manage to sell. That same Harbour-Felax report found that, on average, Japanese automakers’ profits for 2005 were twenty-nine hundred dollars more per vehicle sold in the U.S. than those of American automakers. And most of that profit comes not from lower production costs but from the Japanese automakers’ being able to charge more, because their cars are better designed and more reliable, and because their mix of products is smarter. Honda’s revenue per vehicle, for instance, was twenty-six hundred dollars more than Chrysler’s.

  • Q1 GDP grew by 0.6%
    , May 31st, 2007 at 10:11 am

    The government reported today that the economy grew by 0.6% (annualized) in the first three months of this year. Actually, if you want to be precise, it was 0.6496%, which nearly rounds to 0.7%. In any event, this is a sharp downward revision from the initial estimate of 1.3% growth.
    Bloomberg reports:

    Today’s revisions reflected a bigger trade deficit and fewer inventories than the government estimated last month. The trade deficit widened to an annual pace of $611.8 billion, subtracting 1 percentage point from GDP, twice as much as previously estimated.
    Companies reduced stockpiles at a $4.5 billion rate last quarter compared with initial estimates of a $14.8 billion gain at an annual rate. The figures subtracted another percentage point from growth.
    A jump in consumer spending last quarter was one of the few things that kept the expansion alive. The increase in spending, which accounts for about 70 percent of the economy, was revised up to an annual rate of 4.4 percent, the biggest gain in a year, from an initial estimate of 3.8 percent.

    Over the last four quarters, the economy has grown by just 1.9%. The economy tends to be very trend like, meaning a weak quarter is usually followed by another weak quarter. We’ve now had four straight quarters of below-trend growth. But don’t count the economy out just yet. The Fed may start to lower rates soon. The weak dollar helps as well.

  • New High on the S&P 500
    , May 30th, 2007 at 4:42 pm

    It finally happened! The S&P 500 closed today at 1530.23, a new all-time high. It took seven years and two months to break the old high.
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  • ISS votes Thumbs Down to Biomet Buyout
    , May 30th, 2007 at 10:00 am

    Great news this morning. Institutional Shareholder Services, the highly influential shareholder-advisory service, recommends voting against the Biomet (BMET) buyout offer.
    It’s about time someone spoke out against this deal. I wrote an open letter against the offer back in December. Considering what a strong company Biomet is, the private equity offer of $44 a share is way too low. The important thing to remember is that shareholders have the right to overrule management, especially in important decisions like this. To be approved, the vote needs 75% support.

  • Cramer: “Why does everybody hate me?”
    , May 29th, 2007 at 3:01 pm

    From New York magazine:

    God knows why, but there seems to be a market for this kind of idiocy. In that first year, the ratings took off; the network put the show in not one, not two, but three time slots; I made the cover of Business Week; and less than a year later, I was improbably filling college halls with cheering student fans (for some reason, college kids are an especially eager audience for my show). But sometimes it feels like for every person who likes what I do, there are a dozen who hate me for it. Mad Money has spawned legions of haters, people who write about the show and my character in really negative, sometimes pretty nasty ways. These people accuse me of being a clown or an idiot. Usually, I agree with them. When people ask for my autograph, I instantly hate myself. Half the time I don’t believe I even deserve a television show, and the other half I spend believing that no one is more deserving of a show. Slap me and I’ll change my mind like Faye Dunaway in Chinatown. People also accuse me of being irresponsible or giving bad advice. I don’t agree with that. Some of them have even questioned my integrity recently. That I find absurd.

  • UnitedHealth Braces for Annual Meeting
    , May 29th, 2007 at 10:08 am

    UnitedHealth Group (UNH) is holding its annual meeting today in Minneapolis. The company said that it’s reformed, and I think the market may agree. The AP notes that:

    Shareholder advisory firm Institutional Shareholder Services rates UnitedHealth’s corporate governance practices above 91 percent of other large companies, up from 19 percent a year ago.

    The company has also received a favorable report from Standard & Poor’s.
    UnitedHealth’s financial results have been excellent and the stock is now going for less than 14 times next year’s earnings.

  • I’m Outta Here
    , May 25th, 2007 at 11:23 am

    I’m taking off for the long weekend so no posting today. I hope everyone has a great Memorial Day weekend!

  • 30-Year T-Bond Over 5%
    , May 24th, 2007 at 10:25 am

    Yesterday, the yield on the 30-year Treasury bond closed over 5% for the first time in nine months. With the yield at the short-end falling, the yield curve is becoming normal again.
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  • Microsoft Says No to Yahoo Deal
    , May 24th, 2007 at 9:26 am

    Reuters reports:

    Microsoft said Wednesday that it did not need to buy Yahoo to gain scale in online advertising, because it had “all the pieces” to build a successful ad business.
    Speaking at the Goldman Sachs Internet Conference in Las Vegas, Microsoft’s chief advertising strategist, Yusuf Mehdi, said that the company was already bigger than Yahoo in terms of users of its Web services like e-mail and instant messaging.

    Three weeks ago, I calculated the odds of a MSFT/YHOO deal:

    No. No way. Never.

    I was able to see where this story was going due to my detailed knowledge of the tech industry, my comprehensive understanding of corporate finance and not being totally retarded.