Mullaneblog

The ideals and laws that allow the U.S. to provides its citizens with an abundance of toilet paper – a task that ran afoul in Venezuela  – were flushed down the  preverbal porcelain god last week. 

The Obama administration, led by a president who has been so shaped by the evolution of laws, seemed to lose its way.

Government officials were caught hacking the accounts of AP reporters – one of the  more shorter-sited  plans of attack by our government officials – especially when the most cherished career trait of a reporter is that of tattletale. “If they catch us, I am sure no one at the Associated Press would tell anyone. After all, we’re just doing our jobs.”

This feat of complete bone-headedness was coupled with actions taken by employees at the IRS who were interested in the tax bills of some Tea Party members. No! not the one’s who began a process that tore us apart from tyrannical Briton, but the one’s  who believe the absolute invisible hand cures all. After all, the US didn’t run out of toilet paper.

Best summing these events up was @frankrichny “So many Watergates, so little time. My thoughts on this week’s DC Circus” @NYMag nymag.com/daily/intellig…

Rich catches the silliness of Eric Holder recusing himself as the lead lawyer for the US. It blows the mind that someone of such modest background and able to earn so much success can simply say “time-out” when the role of the free press and government is at hand.

Propublica (http://www.propublica.org/article/how-irs-nonprofit-division-got-so-dysfunctional) took a look into what is going on at the IRS. One excellent data point was the lowly number of 200 low-level employees responsible for reviewing a highly number of some 60,000 nonprofit applications a year. Going nonprofit is in my near future.

My favorite story of the week came @heidimoore via her tweet and from  @theguadian.  Heidi gave a detailed looked into the world of genetically modified seeds and Monsanto. The comments in response to her story are a must review.

Monsanto has truly completed some serious science to help feed the world, particularly as populations expand in areas that are not the most hospitable for growing food. But, does a company so successful in developing leading edge products really need to so closely court the US government to push its wears. This begs the question: Enough already?

Heidi also produced a good read on Apple’s Mr. Cook coming to Washington to talk taxes. @heidimoore: “Apple CEO asks for a ‘new tax policy’ for a tax holiday. Actually, we tried that. We lost jobs. http://t.co/wGtrvvsoLg.” My guess is that a lot of this money was ill timely used for share repurchases as prices peaked in 2005-06 as well. CEOs can be such dingbats.

There were good facts aplenty this past week. Some pointing to good news and others not so good.  @hblodget: The Deficit Is Shrinking Fast! http://t.co/vcCnjR83xn noted that extrapolation by many of the US deficit may be misplaced. (Also, there were some recent government data that point to healthcare costs actually coming down.  For a number of years now our out-of-control healthcare costs seem not to be so out-of-control. We’ll see if it lasts.)

On a less pleasant side, a data point came from the @MilkenInstitute: “The US used to be in top 10 countries for high school grads, we’re now 30th in the world- Gary Becker at #2013GC http://t.co/3IFeAlAq3l.” While the US makes headways developing genetically modified seeds, we are less successful at developing intelligent kids. Well, at least our underdeveloped kids will have plenty of low-cost Doritos.

Another fact of note came from @FareedZakaria noting that “By 2030, half of global stock of capital will reside in the developing world: World Bank bit.ly/14bPhnz @WorldBank” – this would be a very positive sign of wealth broadening out.

While the world’s wealth is predicted to broaden out, the population of the United States may not be over the next few decades, as we Americans keep heading south. Everyone’s going south: “@MarketWatch: Texas dominates the country in new-home-sales http://on.mktw.net/18IOWMa  pic.twitter.com/WgzojUxg7Y”

And finally, the tweet of the week came from @anoushasakoui responding  to a tweet from @uberfact.  Uberfact said “About 50% of breakups now occur via text message.” Anousha responded, “And 100% of those people who do that are losers.”

Until next week.  @edmullane

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George Soros is dead, so said Reuters for the briefest of time a few weeks back. The news service quickly pulled the oops of the held-in-inventory obit.

Many investors have been saying the same recently about Apple. Shares of the iPod-iPad-iPhone-Macbook-etc maker are down from $700 to as low as $390, down some 45%. Ouch!

However, Apple’s woes may be more temporary than the misplaced death notice of the billionaire investor.

A few weeks back, I had the experience of my laptop frying. Oh, the smell of the chemicals. Hmmm. Elizabeth, New Jersey or Sumitomo, Japan you say.

This is the third time in six years I have had to step up to the plate for a new PC.

After Googling who makes PCs these days, it was Dell (owned laptop, hard-drive crashed – pretty crappy), HP (owned laptop – went up in smoke – also pretty crappy ), Acer (got one and didn’t start after I took  out of the box – that was really crappy). My kids and their two MacBooks – NO PROBLEM.

As Steve Jobs so eloquently said about competitors’ products:  they’re “crappy”. And he was right. I used them all and they are.

I rushed up to the Apple store to buy my first Macbook. The store was packed with the faithful buying or learning something new about Apple’s products. This was in suburbia,  not a city where tourists roam Apple stores to see all the cool products. The fad of visiting an Apple store for the sake of  visiting an Apple store has long gone in suburbia.  These were forty- and fifty-somethings buying stuff (kids were still in school). Everyone there I guess was tired of buying crap too.

As is well known in tech-land, when company sales start slowing, watch out. This leads to prices being  slashed,  margins coming down and a once virtuous cycle of a growth business turning often into a vicious one. Apple’s sales are beginning to slow, is the virtuous cycle now over?

Apple also now has a competitor who is getting stronger.  Samsung is gaining share with its new offerings and Google is providing the android operating system. The Galaxy has a bigger screen and is a pretty sweet looking device. (The kids say these andriod products begin to break after a year.)

We’ve seen this device/software model before, Microsoft providing the software and Intel providing the chips and this combination crushed Apple in the 1980s and 90s. Deja vu all over again. Boy! it really looks like Apple’s fate is turning for the worse.

As the not-so-famous-anymore Peter Lynch used to say, invest in what you know. And people know Apple’s products. And for those who know Apple’s products, they are not going to buy other stuff unless Apple’s stuff becomes really crappy. Or, competitors get their act together to make durable, long-lasting, and intuitive products – which I am doubtful about.

Death of Apple? Not. I think investors can be pretty confident it will be a viable company for sometime.

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To: Mr. Alex Mandl, Lead Independent Board Member of the Special Committee

Re: Seeking expensive reimbursement for my consideration to acquire Dell

Dear Mr. Mandl:

I write this while drinking my third martini. I realized that I do not have enough money to pay for my drinks. Then, out of the thin air (actually, the Internet – haha) I received an email alert which says, my pal, Carl Icahn can receive some reimbursement for his efforts to stop Michael from buying his own company on the cheap. (For the record, Mr. Icahn is really not my pal. I saw him on TV once. I don’t think he likes people.)

I guess he wants the same deal as Blackstone. Then, it struck me, why don’t I put in a bid for Dell and then I can get reimbursed for my martinis. I just wanted you to know I have thought very hard about how I would acquire Dell for the last hour or so.

I am a journalist. So I have no money. But apparently that hasn’t stopped Dave Johnson from buying companies. I don’t think he has ever taken money out of his own pocket to buy anything. I doubt he ever paid for shares of Dell or IBM. Oh, well, maybe he borrowed some money to pay for in-the-money stock options. I guess it is always better to use other people’s money (haha). That is probably why I don’t have enough money to pay for these drinks (sometimes I crack myself up).

But, I digress. I have a nice house in Bergen County, New Jersey which has some equity. Actually, we are visiting a bunch of colleges this week, so that money won’t be around much longer. After all Alex, we have to educate our kids. By the way, were you the executive in charge at AT&T when that John Malone sold Telecommunications Inc. to it for a really big price?  No. No. That was that Lance Armstrong guy. Sorry, don’t want to misplace blame on that deal. Boy, was that a bust.

My offer is as follows: I offer to acquire one share of Dell Inc for $14.26, (Note: that’s above the Blackstone offer, so you’re getting a deal.) For my expenses, I am seeking $40.30. This includes 3 martinis (I ordered the happy-hour special cheap vodka, so I’m saving the company money) and one order of white bean humus. Alex, Punch’s white bean humus is killer. (Between you and me, they will give you extra pita if you ask for it.)

Please send the check to Ed Mullane’s Corporation Setup To Acquire One Share of Dell. I will cash check immediately, so I will not let it hang out their indefinitely. My wife hates when people don’t cash her checks. Also, it’s ok to turn my offer down. It won’t hurt my feelings. From looking at the company’s share price, not sure my offer is such a smart move. This is one tough business (know what I mean, nudge, nudge).

Thanks in advance for special committee’s consideration and the check.

Yours truly and all the best regards and cordially and cheers,

Ed

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Comments made in the Associated Press’ THE BIG STORY a few weeks back. The subject: DELL.

http://bigstory.ap.org/article/icahn-proposes-alternative-dell-buyout

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http://www.ft.com/cms/s/2/2963939a-6a60-11e2-a3db-00144feab49a.html#axzz2LvG27eRE

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Discussing M&A for 2013:

http://www.nbr.com/videos/video/2144977517001#.URJjavKujtk

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Comments on consolidation of the US wireless sector -dealREPORTER video

http://www.dealreporter.com/info/2013/01/03/dealreporter-talks-ed-mullane-discusses-wireless-consolidation-in-the-us/

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“Imagine what another four years would be like with @BarackObama. He’s already promised more of the same.” This was another one of Romney’s motivating (sarcasm) tweets that his campaign sent out over the weekend.

Well, if you call a stock market up 45% and jobs created at about five million (versus losing 800,000 per month at the nadir the economy’s collapse), I will take another four years of Obama.

The productivity engine of the US economy – venture capital investment, in areas such as social media – is booming. Dictators in the Middle East are dropping like flies, with Obama using words not bombs to sow the seeds of change. For those who don’t remember, where was Obama’s first international speech as president? London? Berlin? Tokyo? No Cairo. The Arab Spring was soon in full bloom.

Just coincidence? I doubt it. A man whose complexion is not too dissimilar to many Egyptians and possessing a Muslim name able to be elected so soon after 9/11 is probably a powerful sign to young Egyptians. The contagion of democracy continues to this day.

A recovering economy, the ending of two wars, the collapse of decades (if not centuries and millennia) of non-democratic rule in many middle-east countries, leads me to believe Obama has done one heck of a job. Especially when considering the mess he was left with. Oh! That’s right! Iran’s economy is in a freefall as a result of peaceful, multilateral efforts to bring its political leadership to its knees as well.

Try and find a candidate who could have done a better job! The only thing that held Obama back was the extremism of the Tea Party members, or the conservative right: Romney’s prime supporters. If Tea Party members are voted out in this election, then this country can really get the reforms in place needed to get this country humming along again.  The facts and the actions of the Obama presidency are hard to top, especially when considering where the country had been.

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http://www.ft.com/intl/cms/s/2/cd86bbf8-08e7-11e2-9176-00144feabdc0.html#axzz27huU5R21

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The pricing of Facebook’s shares last night and the beginning of trading this morning is an important moment in US business history.

No, not because it is the predominant social media platform, connecting people around the globe; no, not because it is another example of how Goldman Sachs usurped the intent of the 500-maximum S.E.C. investor rule at the expense of the little guy and gal; no, not because people are likely to overpay and lose some money.

It is a seminal event because after 12 years of not buying individuals stocks, the American public is finally ready to take some risk.

This says a few things: Americans believe Facebook is a promising business and believe they have enough saving to start participating in equities again.

Since the collapse of the tech and telecom bubble, Americans have stayed on the sidelines of the stock market. During the late 1990s, a typical month would see mutual fund inflows of $25bn. For the past decade, inflows have been hardly measurable. The buying of individual stocks has been almost non-existent. If there is a way to takeout the effect of day traders, I think it would be alarming the lack of participation in our market.

But the Facebook IPO may change this. People are calling up their FDIC insured banks and asking for the transfer of money to brokerage firm accounts. People are trying to buy shares online. People want to participate in the creative-destructive forces of capitalism.

Media pundits and tech experts say the masses will be overpaying. My guess is is that the pundits wouldn’t be pontificating if they purchased shares of Microsoft, Oracle, Cisco, and Google when they came public. At these times, the voices are always loud, all saying how overpriced these IPOs will be.  Yesterday, a pundit said Microsoft was valued at 760m when it was priced. Today, the software giant makes about four times that figure in free cash flow every three months.

Even Yahoo (if memory serves me correctly) was valued at about $500m on its IPO debut and shot up to $1bn. There was great fanfare of how overpriced and overhyped these shares were. Even mishap after mishap, and four CEOs in the past year, the company has a valuation of about $18.6bn.

Facebook is a good, under-levered company with a competitive leader who wants to succeed. CEO Mark Zuckerberg gives every indication he wants to be in the same league as Gates, Ellison and Jobs, and not those who ran Atari, Commodore and Wang.

There is going to be wild swings in Facebook’s valuation. Leading technology companies can see 30% to 50% swings at points in time. So investors may lose money at the start, but if they stick with leading technology companies, the businesses can be bigger than one’s most wild imagination. Be a capitalist, just buy the stock. (By the way, buy at your own risk, I’m no stock jockey.)

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