Perry Glasser

Posts Tagged ‘Goldman-Sachs’

GREEK DEBT and ANTI-SEMITISM

In Economics, EDUCATION, Finance, Political Economy, Politics on August 2, 2015 at 10:45 am

It is a fundamental understanding of Dollar$ that the only purpose a weasel has is to continue life as a weasel.

Greek Weasel

Greek Weasel

As predicted by Dollar$ a week ago it took 3 days after the Greek people vehemently rejected European demands for austerity for the Weasel-in-Chief Greek prime minister, Alexis Tsipras, to reverse what he told Greek citizens, the same folks who elected him thinking they had one thing but who, in fact, had another.

Running out of co-conspirators at which to point his finger, Tsipras, fired a few Lieutenant Weasels and went back to the grim business of promising austerity in order to joyfully continue spending other people’s money on a lifestyle that include pensions at 60 and tax evasion as a national sport.

Reality sucks.

MEANWHILE BACK IN THE STATES

The rending of garments has nevertheless continued apace for American progressives, a crowd that when facts do not fit the narrative invent new facts.  Vowing solidarity for “poor Greece,” the victim-state, is a progressive necessity required by Left-ish mythology, that state socialism has to work but does not because of a conspiracy of bankers and capitalists who first give you money you requested and then—O Horror!—expect it to be paid back. Equally miserable is the sad fact that people whose chief knowledge of Economics is having defaulted on a car loan and mismanaging credit card debt think that international finance and their own incompetence are one and the same thing.

The goddam nerve of some those money-lenders!

First, they wait for you to ask for money; then they structure a deal that is so smart and so devious, that all the national bankers and economists of Greece were fooled.

WE’VE HEARD THIS BEFORE

Dollar$ writes to inform the naive that the legs on that canard are rooted in anti-Semitism. The cunning that condemned Shylock now condemns Goldman-Sachs, those Jewish New Yorkers who when they are not undermining the world economy to line their own pockets are championing godless communism. When you read the phrase international bankers on the Internet, make no mistake: the writer means world Jewry.

Dollar$ has always been puzzled by the alleged partnership between Jewish communists and Jewish bankers. The fact that the goals of such groups are antithetical does not stop the fascist minded American Left. Why not? It never stopped it before.

When you bear in mind that Hitler founded a party of National Socialists, and it will all remain clear.

Valuing Facebook and LinkedIn: the Pump and Dump?

In Business, Economics, Economy, Finance, Personal Finance, Wall Street on January 28, 2011 at 1:24 pm

Goldman Sachs neatly side-stepped US regulatory agencies by valuing Facebook at $50 billion but limiting sales to off-shore private capital investors, a valuation of $10 per Facebook user.

SEC?  Never  heard of the bums.

Revenues? Proprietary and secret.

Intended use for investor capital? None of your damned business.

Principles cashing out? Shut your mouth.

Surely Mr. Zuckerberg, who is not yet 30, will spend his next 40 years doing the same thing day in and day out.  How could it become boring?

The Pump and Dump strategy?

1. Accrue or issue billions of shares in a company.

2. Pump the stock with PR releases, mysterious rumors, hints of future growth…anything but genuine business acumen.

3. Dump the stock at premiums on the gullible and faithful. Last seller out the door is broke.

Pump and dump is inhibited by SEC regulations, those pesky bureaucrats who insist that balance sheets be public records, require executives who sign off on those records to attest to their completeness and honesty (that’s the Sarbanes-Oxley Law that Republicans insist is a nuisance), and require certified accountants to attest that the balance sheets adhere to standardized accounting practice.

Executives who ignore these laws do hard jail time. Ask the guys who ran WorldCom or Enron. You’ll have to ask on visiting day.

So excuse us for being skeptical of Goldman-Sachs’s valuation and wondering they are engaged in an end-run around US security laws.

Let’s do some arithmetic.

LinkedIn and Revenue – the Real Deal

LinkedIn will be the first social networking site to go public in the US.  The books on an industry are finally opening. (All data from pages B1-2 of the January 28 Wall Street Journal).

LinkedIn reveals it has 90 million users who for the first 9 months of 2010 generated $161 million in revenue.

Let me save you the arithmetic—figure that’s roughly $200 million annualized (add 33%), or near $2.10 revenues per user.

LinkedIn profit

It costs money to make money. Revenue is not profit. LinkedIn declares net income for those nine months to be a measly $1.85 million, or $.02 per user in three quarters, or $.03 per user per year.

That’s right, a whole three pennies.

LinkedIn is about professional networking, jobs, references and other stuff for grownups. LinkedIn offers services Facebook does not. You cannot find a single time-sucking game on LinkedIn.. No Mafia Wars. Most LinkedIn users come to the site less than once per month, a dismal number for any advertising revenue model.

LinkedIn declares three revenue streams:

  • advertising
  • premium subscriptions, and
  • specialized human resource services that accounted for 41% of company revenues

Dollasr$ Asks: What’s Facebook Worth?

It’s hard to imagine two competitors in the same industry being wildly divergent with revenues. The stocks and fortunes of Royal Canadian Lines and Carnival Cruise Lines sail in tandem. Wells Fargo and Bank of America move, mostly, as one.

But for giggles, blind to Facebook’s revenue streams or plans, let’s worship at the Temple of Wunderkind Zukerberg and triple LinkedIn’s revenue per user. Now apply that number to Facebook.

At $.09 per user in annual profit, Facebook with 500 million users might be earning $45 million in profit.

If Golman-Sachs values Facebook at $50 billion, it’s selling stock with a Price/Earnings ratio of more than 100.

Sure, there will be future growth, and if you care to discount it out, I invite you to do it.

At current valuations, if Mr. Zuckerberg and his company live to be 100 years old, he will have earned back all of what investors have put in. If he doubles growth and revenues above these estimates—a mere 50 years.

And that’s to break even.

Comparisons

Mature businesses show P/E ratios from 8 to 15; riskier companies from 15 to 25; technology grwoth companies can go as high as 30.

 

Market Cap (billions, Jan 28 2011)

P/E (trailing)

LinkedIn ??? ???
Royal Canadian Cruise Lines $10 20
Target Corp $38 12
Facebook $50 100 (calc. user basis)
Boeing Corporation $51 15
General Motors $55 8
Microsoft $240 12

Competitive Environment

If you wanted to go into business against RCL or Target or Boeing, you’d need significant capital outlay because you’ll need more than intellectual assets. Building a crusie ship or a jet takes some doing.

But what will it cost to compete with Facebook? How soon until someone, somewhere, gets a faster, cheaper idea?

Remember when IBM was under attack as a monopoly? Remember when Microsoft was under attack as a monopoly? What did it take for Google to enter the game?

Goldman-Sachs needs a visit to the woodshed.

Saving Goldman and Selling America

In Business, Economics, Finance, Wall Street on September 24, 2008 at 11:38 am

Maybe Warren Buffet with $5 billion really can rescue Goldman-Sachs. With Morgan Stanley reduced to the status of your corner bank, now able to accept deposit accounts and all the rules that go with taking shelter under the Fed’s depositor insurance umbrella, Wall Street is beginning to look like Dodge City in 1880—dusty, windblown and streets all but deserted.
Except for the piece Buffet may have saved.
The mechanisms of capitalism are being nationalized. If any entrepreneurs out there go to the markets for capital infusion, the crazy idea that selling shares in private enterprise to spread risk precipitates a healthy economic system by rewarding the bold and innovative with wealth, right now the only underwriter left on the Street is Uncle Sam.
Uncle Sam—that would be you and me.
Last we looked, government is a creature of the people, not its competitor. I have it on the word of Abe Lincoln. “Government by the people, for the people…” It was a hot day at Gettysburg that day, Lincoln kept his remarks brief.
So the nationalization of the mechanisms of capitalism is wonderful news, though probably not what Lincoln had in mind.
With capitalism now nationalized, we can look forward to an annual check from the Fed, your share of fees for underwriting, M&A activity, and interest from loans. Expect soon to be free of income taxes.
How Uncle Sam will manage mergers and acquisitions remains to be seen. Will we do so with the force of the state, or allow shareholders to vote their own interests? Are their synergies to be had by merging Ford and GM, for example? Can we by force of the state make shareholders vote in favor of that merger? How about returning to a single national phone service? Might the nationalization of capitalism be the mechanism to get the insurance business out of the healthcare business and at long last provide healthcare to American citizens in the same way we supply education police protection, and fire protection?
In much of the industrialized world, these services are rights, not purchases of privilege. Look,
when was the last time the fire department pulled up at a flaming address and before tackling a hazard checked the nature of the owner’s coverage? Why should healthcare providers do that if your body is burning with cancer?
Given the resemblance between the Federal Treasury and the Grand Canyon, two very large holes, bith National Wonders, Uncle Sam will soon discover some national advantage in encouraging spin-offs of lucrative US businesses to liquid investors. There are only so many Warren Buffets around, so we will have to look overseas.
The market for American notes is saturated, the dollar is shaky, so it may be time to sell off assets for the needed infusion of cash that will allow us to prosecute Georgie’s Wars. Dubai has money; China has money. They don’t want any more bonds; the poor bastards are already choking on American paper. They’ll want assets, this time. Performing assets.
So with Uncle Sam as the last underwriter, let’s sell them our infrastructure. Port management, for example. The Interstate highway system—they can build all the toll roads they want, assume maintenance costs, and look for revenue—say $.05 per mile of highway. If the Interstate goes for a cool trillion, Uncle Sam as underwriter takes 15 percent.
Lo! $150 billion into the Treasury!
Underwriting and M&A are lucrative businesses. With the market for initial offerings now a nationalized monopoly, I can’t wait to get in on the ground floor when International Widget goes public.
The Wizard of Omaha is no fool; if Goldman is the last man standing on Wall Street, Buffet has bought the last vestige of private enterprise for a song.