Cisco today said that after the close of markets on Tuesday, the company will announce a major acquisition which will "forever change the Internet and its impact on consumers, businesses and governments." We first learned of the news from MarketWatch.
Cisco has been rumored to be about to purchase almost every interesting company in the technology field over the last decade. The company's closest kept secret has been the degree of real interest it has in EMC. While such an acquisition would be huge in the financial markets, it is unclear why it would forever change the Internet. Also, the rumor mill around that partnership has more or less died.
One may feel tempted to think that Cisco wants to get in the bandwidth game, chasing after Google's recent announcement: a trial of open-access, fiber-to-the-home Internet service at speeds of 1Gbps in select locations. But Cisco claims that they have no interest in being a service provider. David McCulloch, Spokesperson at Cisco, told MarketWatch, "our strategy remains to partner very closely with service providers to enable advanced new telecommunications services versus building out public networks ourselves." We wonder if they protest too much, especially since the company just said it was also bailing on WiMAX. My bet is that it's someone in streaming video, or possibly someone in wireless. A streaming video play would make more sense for a company like Cisco.
I know, I know! They are buying Chatroulette! I kid.
So we invite you, for the honor of having great bragging rights, to lay down your bets on just who is going to get a big check from Cisco tomorrow (or more likely, after the deal clears).
Read the comments on this post
Though it may come as a surprise to many Americans, key aspects of the policies enacted by embattled Treasury Secretary Tim Geithner have actually been successful, according to new profiles of Geithner in the New Yorker and the Atlantic.
Geithner, who's been widely criticized for his handling of the Wall Street bailout -- and mercilessly ripped for his poor communication skills -- is portrayed in both pieces as a deft technocrat, but one who isn't afraid to make unpopular decisions. Geithner's role in rescuing the financial sector and avoiding an outright nationalization of banks, according to a quote in the Atlantic from Rahm Emanuel, "saved the United States taxpayer a trillion dollars."
John Cassidy's piece in The New Yorker hinges on Geithner's reputation on the bank stress tests, which, when introduced in April of 2009, soon restored badly-needed confidence into the financial markets. The Obama administration's main choice early last year was whether to nationalize struggling U.S. banks (likely resulting in management shake-ups and certain shareholders being wiped out) or to rely on private capital markets to boost the financial sector.
Geithner called for the latter, and Cassidy reports that the Obama administration reserved nationalizing banks as a weapon of last resort.
As a result of the stress tests, Cassidy notes, the market was able to determine which banks were struggling and which needed more capital. Geithner seems to already patting himself on the back, according to Cassidy's piece. Banks have historically high levels of capital and, as Cassidy puts it, "a jobless recovery is nonetheless a recovery of sorts." (Jobless, in this case, means an unemployment rate hovering near 10 percent, millions of foreclosures projected, and no true consensus about whether the economic recovery will be robust and lasting.)
Here's The New Yorker:
"My basic view is that we did a pretty successful job of putting out a severe financial crisis and avoiding a Great Depression or Great Deflation type of thing," [Geithner] said. "We saved the economy, but we kind of lost the public doing it."
Still, Cassidy notes that Geithner has sometimes suffered from an absence of support from the White House. In one of the piece's toughest quotes, former Commodity Futures Trading Commission official Michael Greenberger says: "There's been a total lack of Presidential leadership. If Obama had been running the war in Afghanistan like he's been dealing with the ï¬ nancial crisis, the Taliban would control the streets of Kabul."
In The Atlantic, Joshua Green is a bit more critical of Geithner's tenure. Green sees Geithner's legacy as one that will be inextricably linked not just to public outrage but to how Wall Street fits into Washington's core values:
"Any study of Geithner is unavoidably a study of how both political parties came to agree that the interests of the financial sector must predominate, of what went wrong when those interests did predominate, and of how someone whose glittering career is a product of that system wound up at the center of an effort to write new rules for it. At the center, really, of the whole Obama presidency."
Geithner may still in large part be a product of the pre-crisis consensus in Washington, implies Green in the Atlantic. Which, Green notes, isn't the same as saying Geithner is beholden to Wall Street or favors the political high-paid CEOs. Here's Green describing the intellectual framework that gave birth to Geithner and his colleagues:
A former Democratic Senate staffer explained the effect this way: "Before the 2008 crisis, [the Banking Committee] was seen as a place where you could go, serve a couple years, and end up going to lobby. Everyone thought that financial services was the perfect industry, where you had a harmonization of progressive values with money. It was a way to be a good Democrat and a good liberal while making lots of money. The mark-to-market accounting changes, the loosening of bank capital requirements, harmonizing international standards--all that stuff was seen as, like, 'Where's the harm in this?' If banks are making a little more money to keep up with their international competitors, what's the big deal?"
Though it may come as a surprise to many Americans, key aspects of the policies enacted by embattled Treasury Secretary Tim Geithner have actually been successful, according to new profiles of Geithner in the New Yorker and the Atlantic.
Geithner, who's been widely criticized for his handling of the Wall Street bailout -- and mercilessly ripped for his poor communication skills -- is portrayed in both pieces as a deft technocrat, but one who isn't afraid to make unpopular decisions. Geithner's role in rescuing the financial sector and avoiding an outright nationalization of banks, according to a quote in the Atlantic from Rahm Emanuel, "saved the United States taxpayer a trillion dollars."
John Cassidy's piece in The New Yorker hinges on Geithner's reputation on the bank stress tests, which, when introduced in April of 2009, soon restored badly-needed confidence into the financial markets. The Obama administration's main choice early last year was whether to nationalize struggling U.S. banks (likely resulting in management shake-ups and certain shareholders being wiped out) or to rely on private capital markets to boost the financial sector.
Geithner called for the latter, and Cassidy reports that the Obama administration reserved nationalizing banks as a weapon of last resort.
As a result of the stress tests, Cassidy notes, the market was able to determine which banks were struggling and which needed more capital. Geithner seems to already patting himself on the back, according to Cassidy's piece. Banks have historically high levels of capital and, as Cassidy puts it, "a jobless recovery is nonetheless a recovery of sorts." (Jobless, in this case, means an unemployment rate hovering near 10 percent, millions of foreclosures projected, and no true consensus about whether the economic recovery will be robust and lasting.)
Here's The New Yorker:
"My basic view is that we did a pretty successful job of putting out a severe financial crisis and avoiding a Great Depression or Great Deflation type of thing," [Geithner] said. "We saved the economy, but we kind of lost the public doing it."
Still, Cassidy notes that Geithner has sometimes suffered from an absence of support from the White House. In one of the piece's toughest quotes, former Commodity Futures Trading Commission official Michael Greenberger says: "There's been a total lack of Presidential leadership. If Obama had been running the war in Afghanistan like he's been dealing with the ï¬ nancial crisis, the Taliban would control the streets of Kabul."
In The Atlantic, Joshua Green is a bit more critical of Geithner's tenure. Green sees Geithner's legacy as one that will be inextricably linked not just to public outrage but to how Wall Street fits into Washington's core values:
"Any study of Geithner is unavoidably a study of how both political parties came to agree that the interests of the financial sector must predominate, of what went wrong when those interests did predominate, and of how someone whose glittering career is a product of that system wound up at the center of an effort to write new rules for it. At the center, really, of the whole Obama presidency."
Geithner may still in large part be a product of the pre-crisis consensus in Washington, implies Green in the Atlantic. Which, Green notes, isn't the same as saying Geithner is beholden to Wall Street or favors the political high-paid CEOs. Here's Green describing the intellectual framework that gave birth to Geithner and his colleagues:
A former Democratic Senate staffer explained the effect this way: "Before the 2008 crisis, [the Banking Committee] was seen as a place where you could go, serve a couple years, and end up going to lobby. Everyone thought that financial services was the perfect industry, where you had a harmonization of progressive values with money. It was a way to be a good Democrat and a good liberal while making lots of money. The mark-to-market accounting changes, the loosening of bank capital requirements, harmonizing international standards--all that stuff was seen as, like, 'Where's the harm in this?' If banks are making a little more money to keep up with their international competitors, what's the big deal?"
by Alex Massie
A new poll of 60 marginal seats Labour won by between six and 14 points in 2005 gives the Tories just a two point lead: 39%-37%. That's good, but not enough to win a majority. No wonder Allister Heath worries that Britain is heading towards the worst of all possible worlds: a hung parliament in which neither party has a majority
It is a calculation that should fill all of us with an immense sense of dread: there is now a 72.2 percent chance of a hung parliament. Or so says Michael Saunders, Citigroup's chief European economist and the one man in the City everybody listens to when it comes to the interaction between parliamentary politics and the financial markets. His model, which incorporates the standard data about the Westminster first-past-the post system, and into which he has fed all of the latest polls, also suggests that there is just a 6.2 percent chance of strong Tory majority, a 19.1 percent chance of a weak one and 2.5 percent chance of a Labour majority. Given the terrible state of our public finances, and Britain's desperate need for a strong government with a clear commitment to fiscal reform, all of this is little short of disastrous.
If no-one wins a majority, Gordon Brown, as the sitting Prime Minister remains in office and has first dibs on cobbling together a coalition with, presumably, the Liberal Democrats (this explains Brown's entirely opportunistic recent conversion to the cause of electoral reform). If that proves impossible then the party with the largest number of seats will be asked if they can form a government, whether it be a majority coalition or a minority ministry.
Suffice it to say, as Allister points out, the markets aren't likely to be enthused by any of this.
So what will the Liberals do? Their difficulty is that while the electorate seems unlikely to be enthused by the idea of their propping up Labour many of their own MPs and local councillors see the Conservatives as a bigger danger (to their own prospects if not the national interest) and are, consequently, more comfortable with a Lib-Lab pact than with sleeping with the Tories.
Relatedly I've a piece at Foreign Policy today marvelling at how Gordon Brown, despite his unpopularity, isn't dead yet.
Take Two has managed to offer analysts and financial markets better than expected results, showing sales going up by a little over 9% year over year for the quarter of the fiscal year, which ended on January 31, reaching 163.2 million dollars. The publisher also managed to reduce its losses by more than a third, to 33.8 million dollars, mainly throu... (read more)
Right around the time the world's financial markets started to collapse, back in 2008, RealNetworks, the folks behind RealPlayer, released RealDVD. It was a short-lived piece of software that made making DVD movie backups fairly painless—too painless for Hollywood, which immediately took RealNetworks to court, claiming all sorts of copyright infringement hokum. That's all in the past now, for RealNetworks has settled with the six "major" Hollywood studios to the sum of $4.5 million. Ouch.
Right around the time the world’s financial markets started to collapse, back in 2008, RealNetworks, the folks behind RealPlayer, released RealDVD. It was a short-lived piece of software that made making DVD movie backups fairly painless—too painless for Hollywood, which immediately took RealNetworks to court, claiming all sorts of copyright infringement hokum. That’s all in the past now, for RealNetworks has settled with the six “major” Hollywood studios to the sum of $4.5 million. Ouch.
The deal sees RealNetworks, yes, cough up $4.5 million for “costs and fees in connection with the litigation.” Some deal: you bring someone else to court, then make them pay all your bills. RealNetworks will also stop supporting RealDVD, and is in the process of refunding the purchase price to the 2,700 people who bought the thing.
The company’s statement is sad:
We are pleased to put this litigation behind us. This is another step toward fulfilling our commitment to simplify our company and focus on our core businesses. Until this dispute, Real had always enjoyed a productive working relationship with Hollywood. With this litigation resolved, I hope that in the future we can find mutually beneficial ways to use Real technology to bring Hollywood’s great work to consumers.
“Core business”? Hasn’t Flash (and hopefully HTML5) made RealVideo irrelevant?
I liked RealDVD, if only because it demonstrated quite clearly that Hollywood has no intention of letting you use the items you buy for your own ends. DVDs copied using RealDVD could only be played on that computer where it was ripped. It’s not like I could have borrowed Doug’s copy of Movie, then shared the resulting file with the other guys or anything.
The point is, RealDVD is now dead as disco, but RealNetworks may have earned itself a little bit of geek cred in trying to stand up to big, bad Hollywood.
I have spoken on the Senate floor many times about the importance of transparency in our markets. Without transparency, there is little hope for effective regulation. And without effective regulation, the very credibility of our markets is threatened.
But I am concerned recent changes in our markets have outpaced regulatory understanding and, accordingly, pose a threat to the stability and credibility of our equities markets. Chief among these is high frequency trading.
Over the past few years, the daily volume of stocks trading in microseconds -- the hallmark of high frequency trading -- has exploded from 30 to 70 percent of the U.S. market. Money and talent are surging into a high frequency trading industry that is red hot, expanding daily into other financial markets not just in the United States but in global capital markets as well.
High frequency trading strategies are pervasive on today's Wall Street, which is fixated on short-term trading profits. Thus far, our regulators have been unable to shed much light on these opaque and dark markets, in part because of their limited understanding of the various types of high frequency trading strategies. Needless to say, I'm very worried about that.
Last year, I felt a little lonely raising these concerns. But this year, I'm starting to have plenty of company.
On January 13th, the Securities and Exchange Commission issued a 74-page concept release to solicit comments on a wide-range of market structure issues. The document raised a number of important questions about the current state of our equities markets, including: "Does implementation of a specific [high frequency trading] strategy benefit or harm market structure performance and the interests of long-term investors?"
The SEC also called attention to trading strategies that are potentially manipulative, including momentum ignition strategies in which "the proprietary firm may initiate a series of orders and trades (along with perhaps spreading false rumors in the marketplace) in an attempt to ignite a rapid price move either up or down."
The SEC went on to ask, "Does...the speed of trading and ability to generate a large amount of orders across multiple trading centers render this type of strategy more of a problem today?"
The SEC raised many critical questions in its concept release, and I appreciate that the SEC is trying to undertake a baseline review. As its comment period moves forward, I am pleased to report that other regulators and market participants, both at home and abroad, have taken notice of the global equity markets' recent changes, including the rise in high frequency trading.
In the United States, the Federal Reserve Bank of Chicago, in the March 2010 issue of its Chicago Fed Letter, argued that the rise of high frequency trading constitutes a systemic risk, asserting, "The high frequency trading environment has the potential to generate errors and losses at a speed and magnitude far greater than that in a floor or screen-based trading environment." In other words, high frequency trading firms are currently locked into a technological arms race that may result in some big disasters.
Citing a number of instances in which trading errors have occurred, the Chicago Fed stated that "a major issue for regulators and policymakers is the extent to which high frequency trading, unfiltered sponsored access, and co-location amplify risks, including systemic risk, by increasing the speed at which trading errors or fraudulent trades can occur."
Moreover, the letter cautions us about the potential for future high frequency trading errors, arguing, "Although algorithmic trading errors have occurred, we likely have not yet seen the full breadth, magnitude, and speed with which they can be generated."
There is action internationally as well. On February 4th, Great Britain's Financial Services Secretary, Paul Myners, announced that British regulators were also conducting an ongoing examination of high frequency trading practices, stating, "People are coming to me, both market users and intermediaries, saying that they have concerns about high frequency trading."
This development comes on the heels of another British effort targeting so-called "spoofing" or "layering" strategies in which traders feign interest in buying or selling a stock in order to manipulate its price. In order to deter such trading practices, the Financial Services Authority (FSA) announced that it would fine or suspend participants who engage in market manipulation. Noting that some market participants may not be sure that spoofing or layering is wrong, an FSA spokeswoman said, "This is to clarify that it is."
In Australia, market participants are also requesting clearer definitions of market manipulation, particularly with regard to momentum strategies like spoofing. In a review of algorithmic trading published February 8th, the Australian Securities Exchange called on its regulators to, "Ensure that...market manipulation provisions...are adequately drafted to capture contemporary forms of trading and provide a more granular definition of market manipulation."
It is critical our regulators understand the risks posed by high frequency trading, both in terms of manipulation and on a systemic level. As the Chicago Fed stated, the threat of an algorithmic trading error wreaking havoc on our equities markets is only magnified by so-called "naked," or unfiltered sponsored access arrangements, which allow traders to interact on markets directly -- without being subject to standard pre-trade filters or risk controls.
Robert Colby, the former deputy director of the SEC's Division of Trading and Markets, warned last September that naked access leaves the marketplace vulnerable to faulty algorithms. In a speech given at a forum on the future of high frequency trading, which was cited by the Chicago Federal Reserve's recent letter, Mr. Colby stated that hundreds of thousands of trades representing billions of dollars could occur in the two minutes it could take for a broker-dealer to cancel an erroneous order executed through naked access.
According to a report released December 14th by the research firm Aite Group, naked access now accounts for a staggering 38% of the market's average daily volume compared to 9% only four years ago.
Let me reiterate that: almost forty percent of the market's volume is executed by high frequency traders interacting directly on exchanges without being subject to any pre-trade risk monitoring.
In January, the SEC acted to address this ominous trend by proposing mandatory pre-trade risk checks for those participating in sponsored access arrangements. This move would essentially eliminate naked access, and I applaud the SEC for its proposal.
While I am pleased that the SEC has taken on naked access and has issued a concept release on market structure issues, there is much work that still needs to be done in order to gain a better understanding of high frequency trading strategies and the risks of frontrunning and manipulation they may create. In the last few months, several industry studies aimed at defining the benefits and drawbacks of high frequency trading have emerged. While these studies may not be the equivalent of peer-reviewed academic studies, they do have the credibility of real-world market experts. And they begin to shed light on the opaque and largely unregulated high frequency trading strategies that dominate today's marketplace.
In addition to the Aite Group study, reports by the research firm, Quantitative Services Group (QSG), the investment banking firm, Jefferies Company, and the institutional brokerage firm, Themis Trading, all raise troubling concerns about the costs of high frequency trading to investors and reinforce the need for enhanced regulatory oversight of these trading practices.
Last November, QSG analyzed the degree to which orders placed by institutional investors are vulnerable to high frequency predatory traders who sniff out large orders and trade ahead of them.
Specifically, the study concluded investors placing large orders risk, "leaving a statistical footprint that can be exploited by the 'tape reading' HFT algorithms." While traders have long tried to trade ahead of large institutional orders, they now have the technology and models to make an exact science out of it.
In a study put forth on November 3rd, the Jefferies Company estimated high frequency traders gain a 100 to 200 millisecond advantage by co-locating their computer servers next to exchanges and subscribing directly to market data feeds. As a result, Jefferies concludes, high frequency traders enjoy, "(almost) risk-free arbitrage opportunities."
A Themis Trading white paper released in December elaborated on Jefferies' conclusion, asserting that high frequency traders, "know with near certainty what the market will be milliseconds ahead of everybody else."
The studies and papers I have mentioned underscore the need for the SEC to implement stricter reporting and disclosure requirements for high frequency traders under its "large trader" authority, as Chairman Mary Schapiro promised she would in a letter to me on December 3rd. We need tagging of high frequency trading orders and next day disclosure to the regulators, and we need it now.
For investors to have confidence in the credibility of our markets, regulators must vigorously pursue a robust framework that maintains strong, fair and transparent markets. I would make five points along these lines.
First, the regulators must get back in the business of providing guidance to market participants on acceptable trading practices and strategies. While the formal rule-making process is a critical component of any robust regulatory framework, so too are timely guidelines that bring clarity and stability to the marketplace. Co-location, flash orders and naked access are just a few practices that seem to have entered the market and become fairly widespread before being subject to proper regulatory scrutiny. For our markets to be credible, it is vital that regulators be pro-active, rather than reactive, when future developments arise.
Second, the SEC must gain a better understanding of current trading strategies by using its "large trader" authority to gather data on high frequency trading activity. Just as importantly, this data - once masked - should be made available to the public for others to analyze.
I am concerned that academics and other independent market analysts do not have access to the data they need to conduct empirical studies on the questions raised by the SEC in its concept release. Absent such data, the ongoing market structure review predictably will receive mainly self-serving comments from high frequency traders themselves and from other market participants who compete for high frequency volume and market share.
Evidence-based rule-making should not be a one-way ratchet because all the "evidence" is provided by those whom the SEC is charged with regulating. We need the SEC to require tagging and disclosure of high frequency trades so that objective and independent analysts -- at FINRA, in academia or elsewhere -- are given the opportunity to study and discern what effects high frequency trading strategies have on long-term investors; they can also help determine which strategies should be considered manipulative.
Third, regulators must better define manipulative activity and provide clear guidance for traders to follow, just as Britain's regulators have done in the area of spoofing. By providing "rules of the road," regulators can create a system better able to prevent and prosecute manipulative activity.
Fourth, the SEC must continue to make reducing systemic and operational risk a top regulatory priority. The SEC's proposal on naked access is a good first step, but exchanges must also be directed to impose universal pre-trade risk checks. If left solely in the hands of individual broker-dealers, a race to the bottom might ensue. We simply must have a level playing field when it comes to risk management that protects our equities markets from fat fingers or faulty algorithms. Regulators must therefore ensure that firms have appropriate operational risk controls to minimize the incidence and magnitude of such errors while also preventing a tidal wave of copycat strategies from potentially wreaking havoc in our equities markets.
Fifth, the SEC should act to address the burgeoning number of order cancellations in the equities markets. While cancellations are not inherently bad - potentially enhancing liquidity by affording automated traders greater flexibility when posting quotes - their use in today's marketplace is clearly excessive and virtually a prima facie case that battles between competing algorithms, which use cancelled orders as feints and indications of misdirection, have become all-too-commonplace, overloading the system and regulators alike.
According to the high frequency trading firm T3Live, on a recent trading day, only 1.247 billion of the 89.704 billion orders on Nasdaq's book were executed - meaning a whopping 98.6% of the total bids and offers were not filled. Cancellations by high frequency traders, according to T3Live, were responsible for the bulk of these unfilled orders.
The high frequency traders that create such massive cancellation rates might cause market data costs for investors to rise, make the price discovery process less efficient and complicate the regulators' understanding of continuously evolving trading strategies. What's more, some manipulative strategies, including layering, rely on the ability to rapidly cancel orders in order to profit from changes in price.
Perhaps excessive cancellation rates should carry a charge. If traders exceed a specified ratio of cancellations to orders, it's only fair that they pay a fee. The ratio could be set high enough so that it would not affect long-term investors (even day traders), and should apply to all trading platforms, including dark pools and ATSs as well as exchanges.
The high-frequency traders who rely on massive cancellations are using up more bandwidth and putting more stress on the data centers. Attempts to reign in cancellations or impose charges are not without precedent. In fact they have already been implemented in derivatives markets where overall volume is a small fraction of the volume in the cash market for stocks. The Chicago Mercantile Exchange's volume ratio test and the London International Financial Futures and Options Exchange's bandwidth usage policy both represent attempts to reign in excessive cancellations and might provide a helpful model for regulators wishing to do the same.
Finally, the high frequency trading industry must come to the table and play a constructive role in resolving current issues in the marketplace, including preventing manipulation and managing risk. In order to maintain fair and transparent markets and avoid unintended consequences, market participants from across the industry must contribute to the regulatory process. I am pleased that a number of responsible firms are stepping forward in a constructive way, both in educating the SEC and me and my staff. I look forward to continuing to work with these industry players.
We all must work together, in the interests of liquidity, efficiency, transparency and fairness to ensure our markets are the strongest and best-regulated in the world. But we cannot have one without the other -- for markets to be strong, they must be well-regulated. So with this reality in mind, I look forward to working with my colleagues, regulatory agencies, and people from across the financial industry to ensure our markets are free, credible and the envy of the world.
SaaS Report: Is Salesforce.com Over or Under Valued? http://bit.ly/bjmBXj
It's rare when you will see a post in this blog about Saas and its place in the financial markets. But a report by former ReadWriteWeb-er Bernard Lunn shines an interesting perspective on the SaaS market.
The report is noteworthy as it comes on the heels of the annual earnings report from Salesforce.com, the first SaaS provider to hit $1 billion in annual revenues. We feel the SaaS market may be the most pivotal sector of the cloud computing world and we expect several other companies in the SaaS market to also reach the $1 billion mark.
Sponsor
We think it's important to look at the market from an investor perspective to get a view of the overall enterprise sector, which is now deeply affected by the onslaught of cloud computing.
SaaS providers should be smiling about this kind of report as it demonstrates that they have a place in the IPO market. Jive Software is believed to be moving toward an IPO.They are just one example of many companies we expect to see move in this direction.
The report looks at the following:
For our purposes, we find the Salesforce.com analysis of most interest. The report gives reasons why Salesforce.com is either over or undervalued.
Here's an excerpt from the report about why Salesforce.com may be overvalued:
"Marc Benioff is selling shares. This was announced in the previous quarterly report on November 25th 2009. The % of his shares that he "may" be selling is significant. He has basically announced that he "may" sell 2,750,00 shares out of a total of 13,371,006 shares he owns. That is 21%. Whether investors are concerned about this remains to be seen. Insider selling is often a trigger for smart outsiders to sell. Currently he is selling shares at a rate of 10,000 per day. Maybe he wants to give serious money to charity and who can fault him (or Bill Gates) for doing that? Concern factor: low."
And undervalued:
"Internet market leaders are never cheap stocks. Waiting for these leaders to become bargains has seldom worked. The only times they are bargains are when other stocks are super- bargains."
The market is still young even though SaaS is mainstream. A report like this one helps provide additional perspectives on the state of the market.
Discuss
Read more of this story at Slashdot.
Continue reading Smartphone navigation shootout
Smartphone navigation shootout originally appeared on Engadget on Thu, 25 Feb 2010 11:54:00 EST. Please see our terms for use of feeds.
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Continue reading Smartphone navigation shootout
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Continue reading Smartphone GPS shootout: Google, Ovi, and Verizon go head-to-head
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Continue reading Smartphone GPS shootout: Google, Ovi, and Verizon go head-to-head
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LONDON (Reuters) - British Seafood, the fish importer and distributor part-owned by 3i Group (III.L), has gone into administration, wiping out gains made by the private equity firm’s sale of healthcare company Ambea.
Tough conditions in financial markets have caused some banks to withdraw trade credit, choking the supply of working capital necessary for businesses like British Seafood.
“It was a growing business and a good business,” said a spokesperson for 3i, which bought a 28.5 percent stake in British Seafood in December 2007.
The company relied on trade credit to pay suppliers in Asia before being paid by its customers several months later.
The collapse of the business wipes out 3i’s investment, valued at 81 million pounds ($124.2 million) at the end of September.
It also wipes out the net gain from the firm’s sale earlier this week of Scandinavian care homes business Ambea to rival private equity firm Triton, which analysts expect to be about 70 million pounds. [ID:nLDE61M172]
Shares in 3i were down 1.8 percent at 264.5 pence at 1115 GMT, but Evolution Securities called the failure a “one off/accident rather than symptomatic of a wider malaise”.
Deloitte has been appointed as administrator to a number of companies in the British Seafood Group. Others, including Five Star Fish, a Grimsby-based fish processing business, is unaffected by the administration.
“We have only just been appointed administrators to the companies and as such our initial efforts will be focussed on reviewing the businesses and protecting their assets,” said Matt Smith, joint administrator.
“We will be exploring the options available to them, including the possibility of a sale as a going concern,” Smith added.
British Seafood grew earnings before interest, tax, depreciation and amortisation 18.7 percent to 26.7 million pounds in 2008, with revenue climbing 27 percent to 324 million pounds. (Reporting by Simon Meads; Editing by Jon Loades-Carter) ($1=.6521 Pound)
I left the power generation industry in 1975 (I think). I did a study of the online transaction service rolled out for Enron’s energy trading. That project forced me to look at how other companies dabbled in this once little-known niche in the US energy sector. Anyone remember Aquilla, a name derived from the Latin word for eagle. Aquilla is still around, but it does business as Black Hills Energy. The other companies in this sector now have some competition.
The basics of energy trading is a variant of online search and retrieval. Information is indexed and then either analysts or smart software work through the data and their changes. The algorithms stipulate that when A happens, B should occur if the probability is X.
In short, energy trading is just another application running on a computer. The reason I mention this is that Google is now in the buying and selling of energy business. You can get the basics in “Google Energy Can Now Buy and Sell Electricity.”
Most of the commentary I have scanned suggests that Google will be able to save money on its own electricity bills. That’s partially correct. My view is that the Google platform is going to take the “old” Enron model and improve it. Just as search and retrieval in the late 1990s was stuck in a rut, energy trading is similarly encumbered with inefficiencies.
My view: Google could be a bigger and better Enron. I do hope that its managers exercise somewhat better judgment than the “old” Enron group did. Worth watching because prior to this announcement I think the power generation, energy traders, and Wall Street mavens did not perceive Google as a mover or shaker in financial markets.
Well, that group of pundits will regroup once the light bulb goes on. Will the power be intermediated through Google’s trading desk? Buying and selling stuff based on digital data is just another Google application. Simple statement. Big implications in my opinion. Those janitor methods at Google are going to be busy little beavers.
Stephen E Arnold, February 21, 2010
I wish to report to the DOE that I was not paid to write this article. I was thinking of making the disclosure to the SEC, but I think that group has its hands full with traditional publicly traded power generation companies.
Kirk Wright, a Florida hedge fund manager, hung himself when faced with a 710-year sentence for 47 counts of fraud, and swindling $185 million from clients including 78 NFL players. This is the gaudy, pink-festooned Lamborghini he bought his wife.
Remember 2008? It seems like so long ago doesn't it? Only two years ago the financial markets were imploding after years of recklessness and Florida-based Kirk Wright was a poster boy for everything wrong. He started out on the up-and-up, investing money for his friends and his own mother, but as things progressed they got out of control. Wright defrauded as many as 500 investors, including 78 members of the NFL Players Association, stealing between $115 and $185 million, offering only printouts from Ameritrade as evidence of his spectacular and recurring profits. When he was caught and prosecuted, facing an impressive 710 year sentence, he decided hanging himself in his jail cell was the easy way out. So he did just that on May 24, 2008. Morbid but true.
But back in 2007, this car is the kind of thing Mr. Wright was buying for his wife with defrauded investor cash (along with a $55,000 engagement ring). It's a $200,000 Lamborghini Gallardo with a custom-made rhinestone-bedazzled logo a subtle three inches wider than the original, a pink Alcantara interior, and custom-painted Asanti wheels.
After arrest, the Lamborghini was impounded and eventually purchased from Police impound by EuroMotorSport in Ft. Lauderdale, FL. The import shop is currently in the process of reselling it with the intent of donating a portion of the profits to the scammed investors. You want to see an example of what got the US into the current economic mess? This is it.
(Thanks for the pictures Alex!)
Photo Credit: Alex's Flickr page, More pictures at the Dupont Registry listing
WASHINGTON — The Federal Reserve decided Thursday to boost the rate banks pay for emergency loans. The action is part of a broader move to pull back the extraordinary aid it provided to fight the worst financial and economic crisis since the 1930s.
The move won't directly affect borrowing costs for millions of Americans. But with the worst of the financial crisis over, it brings the Fed's main crisis lending program closer to normal.
The Fed decided to bump up the so-called "discount" lending rate by one-quarter point to 0.75 percent. The increase takes effect Friday.
The central bank said the action should not be viewed as a signal that it will soon boost interest rates for consumers and businesses. Record-low borrowing costs near zero are still needed to foster the recovery, it said. The Fed repeated its pledge to keep interest rates at "exceptionally low" levels for an "extended period."
The Fed had signaled for weeks that an increase in the discount rate was coming. It made its announcement Thursday after the financial markets had closed. Investors, however, viewed the bump-up in the emergency lending rate as a step toward broader credit tightening. In after-hours trading, the dollar strengthened, yields on two-year Treasury securities rose and stock futures dipped.
The Fed portrayed its action as moving its emergency program for banks closer to normal. But the markets saw it initially as a prelude to higher borrowing costs across the board.
"I think one man's normalization is another man's tightening," said T.J. Marta, market strategist and founder of Marta on the Markets, a financial research firm, explaining the market's reaction.
Marta still thinks higher interest rates for American borrowers are months away.
"The Fed did extraordinary things from keeping the economy imploding during the crisis," he said. "Now that that danger is gone, the Fed can take away some of those supports."
The economy is growing again, and financial conditions have improved. But unemployment is still near double digits, and demand for loans remains weak. Many ordinary Americans and small businesses have found it difficult to borrow.
When credit virtually shut down starting in 2008, banks had nowhere to go except the Fed to borrow. Banks can now more easily tap private lending sources than they could then. As a result, the Fed now feels more comfortable about boosting the rate banks pay on emergency loans.
Because financial conditions have improved, the Fed also said Thursday it will shorten the length of emergency loans drawn from its emergency lending program. They will go back to overnight loans, effective on March 18.
Earlier this month, the Fed shut down a handful of programs to help banks and other companies get access to credit.
Like those program shut downs, the action announced Thursday is "intended as a further normalization of the Federal Reserve's lending facilities," the Fed explained.
"The modifications are not expected to lead to tighter financial conditions for households and businesses and do not signal any change in the outlook for the economy or monetary policy," the Fed said.
BRUSSELS (By AOIFE WHITE, AP) - Greece's finance minister said a detailed rescue plan from other eurozone nations would be the best way to soothe the crisis over market fears that Greece could default on debt payments.
Eurozone nations pledged last week to aid Greece "if needed to guard financial stability in the euro area" -- but did not say how they would help the country. Greece's debt problem has shaken the entire euro zone and undermined the shared currency.
"My guess is that what will stop markets attacking Greece at the moment is a further more explicit message that makes operational what has been decided last Thursday," at a meeting of EU leaders, Greek Finance Minister George Papaconstantinou said.
Market worries of a default have hiked the cost of Greek government borrowing in recent months and caused the euro to slide to a near nine-month low against the dollar.
Papaconstantinou said the 16 countries that use the euro need to go beyond that to "work out a mechanism so that if necessary the mechanism will be there" for any member that cannot pay its debts.
"I think this is the logical way of addressing the issue," he told an audience of European Union policy makers at a European Policy Centre think-tank event in Brussels.
However, Papaconstantinou said last week's statement was a "watershed" because it showed that "in the eurozone, no one country is alone and when it comes down to it they stick together."
He blamed financial markets for exaggerating Greece's debt worries, saying Greece's economic output is just over 2 percent of the euro area's and a default "would not ... create a problem for the euro area."
"Any country is prey and will be prey to speculative forces," he said. "Today it's Greece, tomorrow it could be another country."
Eurozone finance ministers meet for talks later Monday to discuss whether they think Greece's austerity program will be enough to reduce its massive deficit over the next three years. Ministers from all 27 EU countries then meet Tuesday.
Luxembourg Prime Minister Jean-Claude Juncker, who leads the talks, said "it will be up to the Greeks to prove that the existing adjustment program will be sufficient" and that "we will check in March to see if Greece is on that track."
He rejected any suggestion that the debt crisis would force Greece to abandon the euro, saying "I don't think that this absurd theory of expelling Greece from the eurozone has any chance of being taken seriously."
The European Commission has already warned that it will ask Greece to do more if it can't implement promised spending cuts and tax hikes -- which have already sparked protests and a sweeping public sector strike in Greece.
It wants to keep Greece on a tight rein, ordering the government to report back in mid-March to show what kind of cuts it has made. The EU could then demand tougher action.
The Greek government has promised to do everything necessary to reduce its deficit from 12.7 percent of gross domestic product last year to 8.7 percent this year -- and under a 3 percent limit set by EU rules by the end of 2012.
Greece's credibility also came under fire from the European Commission on Monday, which said it wants Greece to explain by the end of February how it used complex financial deals that allegedly made its debt limits look lower.
The EU executive is seeking the power to audit the Greek public finances following a damning report from the EU statistics agency Eurostat that said Greece falsified data to hide the extent of last year's deficit.
EU spokesman Amadeu Altafaj Tardio says the EU has given Greece an end-of-February deadline to give details on how the deals, called currency swaps, affected government accounts since 2001.
He said such swaps weren't illegal unless the Greece was not using market rates to calculate the exchange rates used for the swaps. Greece never told the EU that it was using the swaps to mask debt, he said.
Papaconstantinou said some of the derivative contracts used in the past "were at the time legal and Greece was not the only country" using them. He said they have now "been made illegal and Greece has not used them since."
He said the government now does not want to use financing that is not approved by Eurostat.
"We do want to restore credibility," he said. "We have enough trouble as it is convincing people that our numbers are real."
Greek finance ministry officials, speaking on condition of anonymity, told the Associated Press on Sunday that the government has met with most major international banks over the last months "to explore options and discuss their involvement in financing Greek national debt."
They said any debt financing proposals would be conducted transparently and in line with rules on government debt set by Eurostat.
Associated Press writer Robert Wielaard contributed to this story.
"My guess is that what will stop markets attacking Greece at the moment is a further more explicit message that makes operational what has been decided last Thursday," at a meeting of EU leaders, Greek Finance Minister George Papaconstantinou said.
Market worries of a default have hiked the cost of Greek government borrowing in recent months and caused the euro to slide to a near nine-month low against the dollar.
Papaconstantinou said the 16 countries that use the euro need to go beyond that to "work out a mechanism so that if necessary the mechanism will be there" for any member that cannot pay its debts.
"I think this is the logical way of addressing the issue," he told an audience of European Union policy makers at a European Policy Centre think-tank event in Brussels.
However, Papaconstantinou said last week's statement was a "watershed" because it showed that "in the eurozone, no one country is alone and when it comes down to it they stick together."
He blamed financial markets for exaggerating Greece's debt worries, saying Greece's economic output is just over 2 percent of the euro area's and a default "would not ... create a problem for the euro area."
"Any country is prey and will be prey to speculative forces," he said. "Today it's Greece, tomorrow it could be another country."
Eurozone finance ministers meet for talks later Monday to discuss whether they think Greece's austerity program will be enough to reduce its massive deficit over the next three years. Ministers from all 27 EU countries then meet Tuesday.
Luxembourg Prime Minister Jean-Claude Juncker, who leads the talks, said "it will be up to the Greeks to prove that the existing adjustment program will be sufficient" and that "we will check in March to see if Greece is on that track."
He rejected any suggestion that the debt crisis would force Greece to abandon the euro, saying "I don't think that this absurd theory of expelling Greece from the eurozone has any chance of being taken seriously."
The European Commission has already warned that it will ask Greece to do more if it can't implement promised spending cuts and tax hikes – which have already sparked protests and a sweeping public sector strike in Greece.
It wants to keep Greece on a tight rein, ordering the government to report back in mid-March to show what kind of cuts it has made. The EU could then demand tougher action.
The Greek government has promised to do everything necessary to reduce its deficit from 12.7 percent of gross domestic product last year to 8.7 percent this year – and under a 3 percent limit set by EU rules by the end of 2012.
Greece's credibility also came under fire from the European Commission on Monday, which said it wants Greece to explain by the end of February how it used complex financial deals that allegedly made its debt limits look lower.
The EU executive is seeking the power to audit the Greek public finances following a damning report from the EU statistics agency Eurostat that said Greece falsified data to hide the extent of last year's deficit.
EU spokesman Amadeu Altafaj Tardio says the EU has given Greece an end-of-February deadline to give details on how the deals, called currency swaps, affected government accounts since 2001.
He said such swaps weren't illegal unless the Greece was not using market rates to calculate the exchange rates used for the swaps. Greece never told the EU that it was using the swaps to mask debt, he said.
Papaconstantinou said some of the derivative contracts used in the past "were at the time legal and Greece was not the only country" using them. He said they have now "been made illegal and Greece has not used them since."
He said the government now does not want to use financing that is not approved by Eurostat.
"We do want to restore credibility," he said. "We have enough trouble as it is convincing people that our numbers are real."
Greek finance ministry officials, speaking on condition of anonymity, told the Associated Press on Sunday that the government has met with most major international banks over the last months "to explore options and discuss their involvement in financing Greek national debt."
They said any debt financing proposals would be conducted transparently and in line with rules on government debt set by Eurostat.
Associated Press writer Robert Wielaard contributed to this story.
