Analysis and commentary on economic news, trends and issues, with an emphasis on Seattle and the Northwest.
October 4, 2013 at 10:30 AM
Twitter, the social-network outfit that made 140 characters famous and turned millions of us into tweeps who tweet (I’m @jontalton), is preparing for its initial public offering. Its prospectus, made public on Thursday, revealed that it has been steadily losing money, has yet to turn a profit, and has seen user growth slow since the end of last year even as mobile advertising is increasing.
There’s little question that an IPO will make the company’s executives and investors rich. But will it succeed as a publicly traded stock? Last year, Facebook went public and flopped before beginning a steady climb since the summer. Don Dion of DRD Investments writes on Seeking Alpha that Twitter will work to avoid Facebook’s IPO blunders and that aggressive investors should buy this “exciting” offering. But he also noted:
Questions about the structure of the company have surfaced, regarding the competence of the engineering team that was entrenched since the company’s start and their choice of team members along the way. Some ex-employees have noted that this leadership system made it impossible to rise in the company. Other problems with rumors that leak from high leadership positions cause concerns whether the company is ready for the changeover. However, as with any tech company, Twitter is likely to make necessary changes quickly, if reluctantly, in future years.
What do you think?
Read on for some of the best business and economy stories of the week, and the haiku…
This Week’s Links:
• Where poor and uninsured Americans live — and where Medicaid won’t be expanded (interactive map) | NY Times
• Will financial markets crash before October 17th or after? | Jeff Frankel
• Smaller aerospace companies most at risk from U.S. shutdown | Flightglobal
• The end of convergence? | Project Syndicate
• Wealth patterns and retirement readiness | Tim Taylor
• Some economic consequences of the shutdown | NYT Economix
• The loss of U.S. preeminence | Simon Johnson
• Repealing the medical-device tax: The plan to give GE more money | Beat the Press
Today’s Econ Haiku:
The board whacked Ballmer
Good corporate governance
Hope that doesn’t change
July 18, 2013 at 10:33 AM
Creative class scholar Richard Florida has been digging into the geography of venture capital deals and high-tech startups, with a particular interest in how they are shifting from suburbs to cities, e.g. from Silicon Valley proper to San Francisco. His latest post has good news and bad news for Seattle.
Looking at venture capital deals by area code, Seattle’s 206 comes in at No. 10 nationally. The leaders are Silicon Valley (Palo Alto, Mountain View, Sunnyvale and Los Altos), San Francisco, Manhattan and Boston. San Francisco leaped ahead of San Jose, Sunnyvale and Santa Clara in Silicon Valley. Seattle comes in at No. 11 in dollar value, with Bellevue, Redmond and the Seattle suburbs ranked No. 16.
For my money, the Bay Area is sui generis with its combination of world-class universities, federal research operations, VC outfits and deep roots for technology companies going all the way back to Dave Packard and Bill Hewlett’s garage in 1939 and the defection of “The Traitorous Eight” from Shockley Semiconductor in 1957. So Seattle isn’t going to be the “next Silicon Valley.” No place is going to be the “next Silicon Valley.” Competing against New York and Boston is similarly unrealistic. The action is among the next tier, and here’s the bad news: Seattle faces formidable competition.
September 21, 2012 at 10:08 AM
With the new iPhone 5 as tailwinds, Apple shares led the stock market higher today. A reader comments: “It is during my short lifetime, but just barely, that there was a day when less than one million shares were traded on the NYSE in a single day. An hour and a half into trading today, 7 + million shares of AAPL had traded hands.”
This on a day that the Wall Street Journal carried a story, “Apple Makes a Wrong Turn,” detailing the company’s move to replace Google’s mapping software with its own and prompting a customer backlash. It is a rare blunder, to be sure, but Apple is still in the new post-Steve Jobs territory. The New Republic trenchantly holds out the possibility of decline. And its shares, at $704, are pricey. On the other hand, its P/E is an affordable 16.62.
What do you think?
Read on for the best links of the week and the econ haiku:
June 11, 2012 at 9:05 AM
Silicon Valley is hard to beat, but by one calculation the Puget Sound region has done better in the long run at creating and retaining science, technology, engineering and mathematics-related (STEM) jobs. This according to a study published last month on the New Geography blog. It helps explain one reason (another is trade) why Seattle is doing better than most places in the two-track surviving/depression economy.
So which areas offer better long-term, broad-based prospects for tech growth? The most consistent performer over the period we assessed is the Seattle-Tacoma-Bellevue, Wash., metro area, which takes first place on our list. Its 12 percent tech job growth over the past two years and 7.6 percent STEM growth beat the Valley’s numbers. More important for potential job-seekers, the Puget Sound regions has grown consistently in good times and bad, boasting a remarkable 43 percent increase in tech employment over the decade and an 18 percent expansion in STEM jobs.
It goes on to note, “Seattle withstood both recessions of the past decade better than most regions, particularly the Valley. The presence of such solid tech-oriented companies as Microsoft, Amazon and Boeing — and lower housing costs than the Bay Area — may have much to do with this.” I’d add: the University of Washington (n.b. legislators).
April 10, 2012 at 10:02 AM
Nearly every week, I get an email from a skilled American worker who can’t find work in the technology industries. Now comes a report, via the Wall Street Journal, that the government has received 25,600 petitions for H-1B skilled-worker visas since April 2. That’s a rate twice as high as that for all of April last year.
The Journal quotes Seattle business-immigration lawyer Steve Miller: “We’re the busiest we have been in four years.” The visa program is intended to fill positions where there may be a shortage of qualified citizens, especially in software, engineering and other tech fields.
It has also long been a flash point, with critics saying companies are after cheaper labor and Americans lose out.
March 16, 2012 at 10:14 AM
The death of Steve Jobs and a devastating report in the New York Times on worker conditions in China did nothing to stop the upward fortunes of Apple. The new iPad was launched to universal acclaim and Apple shares hit a record.
Can the company keep ahead of its Android competitors and the ambitions of Microsoft to get back in the game? That’s the question in today’s poll:
Read on for the best links of the week and the haiku:
February 2, 2012 at 9:48 AM
The initial public offering for Facebook, scheduled for May, says much about the American economy. It’s the most anticipated business event of the year. Yet amid the largest unemployment crisis since the Great Depression, Facebook will create few if any new jobs. The social networking company employs 3,200 mostly highly skilled workers, largely in Silicon Valley. By comparison, Microsoft employs 40,000 in the Seattle area alone. General Motors has more than 200,000 employees across a range of skills. These are companies that actually make productive things. Facebook provides an online forum in which we amuse ourselves and check on former girlfriends and boyfriends. Once it must dance to Wall Street’s tune, Facebook will be under relentless pressure to hold down or even cut the number of employees.
In a nation with retrograde socio-economic mobility in America, the IPO will result in the usual group of winners. A lucky 1,000 Facebook employees who own shares will become millionaires. Depending on the deal’s valuation, the investment banks on Wall Street will pocket $500 million in fees, nearly half of Amtrak’s annual subsidy. As usual, average shareholders will be virtually shut out of whatever quick profits come from the early days of the offering.
(Here’s Wired’s annotated version of Mark Zuckerberg’s “open letter”).
January 26, 2012 at 9:52 AM
Another New York Times story today details the horrific working conditions for the Chinese worker-serfs who assemble Apple’s products. “Problems are as varied as onerous work environments and serious — sometimes deadly — safety problems.” It goes on:
Employees work long hours, in some cases seven days a week, and live in crowded dorms. Some say they stand so long that their legs swell until they have trouble walking. Underage workers have helped build Apple’s products, and the company’s suppliers have improperly disposed of hazardous waste and falsified records, according to company reports and advocacy groups that, within China, are often considered reliable, independent monitors.
More troubling, the groups say, is some suppliers’ disregard for workers’ health. Two years ago, 137 workers at an Apple supplier in eastern China were injured after they were ordered to use a poisonous chemical to clean iPhone screens.
January 25, 2012 at 1:20 AM
Yesterday’s post on Apple outsourcing most of its manufacturing to — how does one put it? — Chinese workers in serf conditions provoked more comments than anything I’ve written at the Seattle Times, or any other newspaper for that matter. The loss of our high-tech manufacturing base is not new, Intel’s Andy Grove wrote about it two years ago, and it’s not confined to Apple. But as America’s middle-class continues to decline, seeing itself more and more pushed into low-wage service jobs, the issue becomes more combustible.
Too many of our business leaders have swung 180 degrees from Henry Ford at the start of the 20th century. Before Ford, the automobile was an expensive, rich-man’s toy. Using advanced mass production, he made it affordable to most Americans. But he did more, paying his workers good wages so they could buy his products. Ford’s insight upset many robber barons of the time, but he wasn’t alone. John Henry Patterson of National Cash Register did much the same. With business leaders such as these, the sweatshops of the Industrial Revolution were banished and America was on its way to creating the largest middle-class in history.
What would they say to America’s CEOs today?
January 24, 2012 at 9:30 AM
The most disturbing story I’ve read in a good while came with Sunday’s New York Times, on why America has lost its high-tech manufacturing jobs. It focuses on Apple, which employs 43,000 in the United States, a fraction of the 400,000 Americans who worked for General Motors at its zenith. As the Times reports, “Many more people work for Apple’s contractors: an additional 700,000 people engineer, build and assemble iPads, iPhones and Apple’s other products. But almost none of them work in the United States.” Most are in Asia, including at China’s notorious Foxconn.
At a gathering of Silicon Valley executives last February, President Obama asked what it would take to make iPhones in the United States. The late Steve Jobs said, “Those jobs aren’t coming back.” Why? Executives such as Mr. Jobs want the “flexibility” of Chinese workers when he demanded a last-minute glass screen on the phone:
A foreman immediately roused 8,000 workers inside the company’s dormitories, according to the executive. Each employee was given a biscuit and a cup of tea, guided to a workstation and within half an hour started a 12-hour shift fitting glass screens into beveled frames. Within 96 hours, the plant was producing over 10,000 iPhones a day. “The speed and flexibility is breathtaking,” the (Apple) executive said. “There’s no American plant that can match that.”