Showing posts with label Technology. Show all posts
Showing posts with label Technology. Show all posts

Thursday, January 23, 2014

Quick Look at IBM and Lenovo

It was reported this week that IBM will sell its x86 division to Lenovo for $2.3 billion. This came after IBM reported its seventh straight quarter of declining revenue, at $27.7 billion for Q4-2013. Details show that Software, Services and Global Financing divisions each grew, but Systems and Technology was the worst-performing division, declining in revenue by 26.1%. The deal with Lenovo allows IBM to offload the low-end server business. The x86 business is "the generic name for Intel processors released after the original 8086 processor."

This isn't the first deal between IBM and Lenovo. In 2005, Lenovo purchased IBM's PC business, and later acquisitions propelled Lenovo to be world's top PC company last year. While IBM had a disappointing 2013, being the only company in Dow Jones to decrease, Lenovo posted record-high revenue and profit in its latest quarterly financials released in November. Notebooks consisted over half of Lenovo's revenue, and its industry outlook cites that "customers no longer see Tablet as PC replacement."

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Sunday, September 22, 2013

Microsoft Nokia Deal Summary

Microsoft Corporation and Nokia Corporations announced a deal on September 3, in which Microsoft would pay $7.17 billion USD to purchase Nokia’s Devices & Services business and license Nokia’s patents. Microsoft will utilize its overseas cash reserves to complete the transaction. At the end of Q2-2013, Microsoft’s cash and short-term investments totaled more than $76 billion. Nokia’s mobile business, which Microsoft purchased for 3.79 billion Euros, generated nearly half of Nokia’s 30.2 billion Euro revenue. In all, the purchase was a bargain for Microsoft.

The challenge comes to integrating the businesses. More than 30,000 Nokia employees were brought into Microsoft, including former CEO Stephen Elop. The two companies have been in partnership since 2011, and this deal is the second largest acquisition Microsoft has ever done. The acquisition also marks a remarkable transition in the Windows business model: vertical integration, as Microsoft aims to introduce its Windows Phone software into the hardware units. Microsoft has long touted a separation of software and hardware in the PC era. But as mobile hardware has been less commodity-like than computer hardware, Microsoft expects this deal to be accretive to its adjusted EPS starting in fiscal year 2015. Microsoft had been receiving less than $10 in software licensing fees from Nokia, but now can make more than $40. The challenge becomes selling more Windows phones. Currently it lags behind Android and iOS. And with Apple introducing reduced-cost iPhone models, the challenge becomes even harder for Windows Phone to find its niche.

Two weeks after the Nokia deal, Microsoft announced that it would increase its dividend 22% over the previous quarter, and authorized up to $40 billion in share repurchases.

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Tuesday, May 21, 2013

A Look into Venture Capital Firms Behind Tumblr

Yahoo's acquisition of Tumblr was a boon for many, including Union Square Ventures and Spark Capital, the two venture capital firms who made initial investments into Tumblr during its infancy. The combined investments of $10 million translated to 47% ownership of the company, giving them a 50-fold return in the recent deal with Yahoo that valued Tumblr at $1.1 billion. The deal was also a spark for the New York start-up community, as Tumblr represents the "largest venture-backed purchase for a New York company."

Union Square Ventures, based in New York, describes itself on its website as a "small collegial partnership that manages $450,000,000 across three funds" and invests in companies that "create services that have the potential to fundamentally transform important markets." Spark Capital, based in Boston, manages about $1.5 billion. Common across both funds include Twitter.

On Tuesday, the front page of Union Square Ventures highlights the Tumblr acquisition, which characterizes Tumblr as "world's greatest platforms for self expression." Tumblr has 108 million blogs across its network, and generates about $13 million in revenue annually, which is the amount Yahoo generates daily. Nevertheless, it is the younger audience and mobile users whom Yahoo seeks to attract through this acquisition.

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Friday, February 1, 2013

“Math Will Rock Your World” Digest

The article “Math Will Rock Your World”, a cover story featured in BusinessWeek and published on January 23, 2006, talks about the increasingly important role that mathematics and data analysis have played in industries and daily lives. In particular, subjects seemingly incongruous with analytic, such as linguistics, have become intertwined. This was discussed in the startup company Inform Technologies LLC, in which the algorithm “combs through thousands of press articles and blog posts” and “analyze each article by its language and context.” At the foundation of this data analysis are mathematical algorithms. Subjects and relationships between subjects combine to construct the polytope, “an object floating in space that has an edge for every known scrap of information.” This development is today’s informational revolution.

Technology companies, from Google to Facebook, are increasingly trying to make use of the gigabytes of information they have. The challenge is to use the information, most of which are stored as qualitative idea, into quantitative algorithms that can be propagated. These developments can be observed presently through efforts such as personally-targeted advertisement on Google searches or Facebook profiles. The article stresses the importance of data analysis in today’s business when it talks about how Ford Motor “could have sold an additional $625 million worth of trucks if it had lifted its online ad budget from 2.5% to 6% of the total.” Online advertisement allows companies to “profile customers” as the companies “know where their prospective customers are browsing, what they click on, and often, what they buy.” These ideas altogether illustrate the idea that access to information and the efficient mathematical analysis of the information can lead to great business solutions.

While this development fosters efficiency, it also raises some concerns that the article addresses. Utmost concern is privacy, which companies from Google and Facebook have all grappled with in the recent years. The inevitability of the “power of mathematicians to make sense of personal data and to model the behavior of individuals” will compromise privacy, and this is a concern not just for the individuals who data are being utilized. If the individuals fear for their data being manipulated beyond their range of comfort, they may lock the information up and prevent them from being utilized. This would hamper efforts of the mathematicians to develop algorithms and determine business or practical solutions. Another concern is the complexity of the new development. Managers must “understand enough about math to question the assumptions behind the numbers,” given that it becomes much easier to deceit “someone by having analysis based on lots of data and graphs.” As a result, this is the challenge for United States, as the article mentions. The country “must breed more top-notch mathematicians at home” by revamping education and simultaneously “cultivate greater math savvy” as the subject becomes more prevalent in the business profession.

For students studying mathematics and related fields, now is a great opportunity to foster these interests. Computer scientists and quantitative analysts are in high demand, and there is much room for development in this inchoate field. But even for those not directly working in this field, an understanding of the subject becomes increasingly important as well. A solid knowledge foundation allows for critical analysis of the technological improvements. As the field of data mining continues to revolutionaries business and the way society progresses, it is in the best interest of individuals to not only know how to best utilize these developments, but also to protect one’s own information to ensure that privacy is not greatly compromised in the reach for progress.

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Wednesday, July 25, 2012

Correlations Among Facebook and Zynga

See previous related post: Facebook: Two Months Since IPO

After the market closed Wednesday, Zynga (NASDAQ: ZNGA) delivered a disappointing Q2 earnings report and outlook. Revenue was $332.5 million, short of the $343.1 million predicted by analysts. Profit was 1 cent a share, short of the 6-cent average estimate. Furthermore, Zynga cites that due to "delays in launching new games, a faster decline in existing web games due in part to a more challenging environment on the Facebook web platform, and reduced expectations for Draw Something," 2012 bookings will be around $1.15 billion to $1.225 billion, short of the projection from April of $1.43 billion to $1.5 billion. In the after hours, shares of Zynga have fallen by over 38%, but it wasn't the only one negatively affected by this news. Facebook saw its shares dip over 7% in the after hours.

The link between Zynga and Facebook (NASDAQ: FB)  is evident in the latter's mention in Zynga's report today. Just how correlated have the stock movements of the two companies been? How about their correlations to LinkedIn (NYSE: LNKD)? Historical prices, since Facebook's IPO in mid-May, were compiled from Google Finance, and the daily changes were documented:

Date  Zynga Facebook LinkedIn Boeing
25-Jul 3.25% 3.13% -0.78% 2.78%
24-Jul -3.34% -1.04% -1.16% -1.21%
23-Jul 6.04% -0.03% -1.94% -1.33%
20-Jul 5.26% -0.83% -2.20% -1.30%
19-Jul -1.08% -0.38% 3.86% 1.31%
18-Jul 0.66% 3.63% 0.74% 1.07%
17-Jul -5.18% -0.53% 0.61% 0.19%
16-Jul -1.43% -8.07% -2.25% -0.73%
13-Jul -2.39% -0.29% 0.91% 2.51%
12-Jul 1.41% -0.52% 3.52% 0.27%
11-Jul -1.20% -1.59% 1.56% -2.32%
10-Jul -4.39% -2.18% -3.35% -1.09%
9-Jul -2.24% 1.39% -5.40% 0.46%
6-Jul -1.47% 0.83% 0.57% -1.01%
5-Jul 0.74% 0.87% -0.28% 0.23%
3-Jul -2.88% 1.40% 0.85% 1.49%
2-Jul 2.21% -1.06% 1.28% -1.51%
29-Jun 1.12% -0.83% 3.44% 3.80%
28-Jun -4.44% -2.70% -2.31% -0.40%
27-Jun -2.26% -2.63% -1.17% 1.33%
26-Jun -4.95% 3.24% 3.27% -0.17%
25-Jun 1.00% -3.00% -3.56% -1.26%
22-Jun 4.90% 3.80% 4.56% 0.83%
21-Jun -2.89% 0.76% -2.93% -2.25%
20-Jun -1.34% -0.97% -0.07% 0.12%
19-Jun 3.29% 1.59% 0.17% 1.42%
18-Jun 3.96% 4.67% 3.09% -0.13%
15-Jun 10.76% 6.08% 3.78% 0.19%
14-Jun -0.40% 3.74% 2.89% -0.29%
13-Jun 1.20% -0.47% 1.13% -0.72%
12-Jun -10.27% 1.48% 0.18% 3.52%
11-Jun -8.26% -0.37% -2.05% 0.24%
8-Jun 0.33% 3.00% 2.26% -0.01%
7-Jun -2.11% -1.86% 1.13% 1.35%
6-Jun 7.50% 3.63% 0.09% 2.13%
5-Jun 0.35% -3.83% 2.10% 0.12%
4-Jun -4.99% -2.96% -0.46% 0.39%
1-Jun -3.99% -6.35% -4.78% -3.40%
31-May 6.64% 5.00% -2.07% 0.32%
30-May -3.61% -2.25% -1.81% -1.43%
29-May -7.87% -9.62% 1.44% 0.57%
25-May -2.79% -3.39% -0.28% -1.95%
24-May -3.82% 3.22% -4.60% -0.25%
23-May 3.97% 3.23% 2.20% 0.13%
22-May -4.09% -8.90% 4.64% -0.42%
21-May -0.98% -10.99% -2.20% 3.80%
18-May -13.42% 0.61% -5.65% -0.83%

As a control group, Boeing (NYSE: BA) was also selected to represent a company from the vastly different sector of industrial. The correlations among these vectors were calculated using the =CORREL() Excel function, as the results are as follows:
  • ZNGA / FB: 0.41262114
  • ZNGA / LNKD: 0.327412705
  • FB / LNKD: 0.187973772
  • ZNGA / BA: 0.067813629
  • FB / BA: 0.112054524
  • LNKD / BA: 0.285873686
Among these results, Facebook and Zynga did have the highest correlation, greater than either one's to LinkedIn. At the same time, Boeing had the highest correlation to LinkedIn, compared to either Zynga or Facebook. Given the high correlation between Zynga and Facebook, the latter of which is due to deliver its first earnings report as a public company on Thursday, it looks like Zynga, right after its disappointing report, has a good immediate chance to rebound back up or dip further.

Sources:

Tuesday, July 17, 2012

Facebook: Two Months Since IPO

See previous related post: Facebook Ready for IPO

To truly visualize the disappointment of Facebook (NASDAQ: FB) two months after its initial public offering, compare it with nothing else but LinkedIn (NYSE: LNKD) during the same period. From the IPO price of $38 launched on May 18th, Facebook has closed as low as 25.87. It made modest gains in June, climbing back as high as $33.10 on June 26th, before falling back down to close Tuesday at $28.09. This comes over the news that users in both the United States and Europe had fallen over the past six months. The research by Capstone, reported that US users declined by 1.1%, while 14 of 23 countries in which Facebook had over 50% penetration experienced "fewer users or saw little change." This report comes days after Warren Buffett, who's known to hold onto stocks for the long-term value, stated that "investors frustrated with the stock’s decline since its public offering are paying the price for betting on a short-term rally." Given the closing price of $28.09, that is a 26.08% drop during the period.

LinkedIn, the professional network, in the meantime saw its shares fall from the May 17th closing price of $104.95 to the present $103.84. That is only an 1.06% drop. What may be surprising is that the financial statements of Facebook look much more healthy. While people may claim is overvalued at its P/E ratio approaching 90, LinkedIn still has its ratio soaring above 600. Facebook's Q1 profit margin also trumped that of LinkedIn, 19.38% to 2.65%. But it's the growth that's raising the concern. Facebook's profit margin is actually down from 2011, when it was 26.95%, while LinkedIn has seen it soar from 2.28%. It's not just Wall Street that is punishing Facebook. In the latest American Customer Satisfaction Index E-Business Report, Facebook sank to a record low, falling behind Google+ and LinkedIn. Among the complaints of Facebook included "an excess of ads and privacy concerns."

Tumbling with Facebook over the past two months is Zynga (NASDAQ: ZNGA). From the $8.27 closing price of May 17th, it is currently at $4.58, representing a whopping 44.62% decline. Zynga is heavily reliant on Facebook to launch its social game services, and the Q1 profit margin was a dismal -26.59%.

Sources:

Thursday, May 24, 2012

Evaluating Methods of Communication: Rules of Phone Calls?

A conversation with a friend led to the question of "are there rules for when one can call someone?" Of course there are not, unless we are dealing with restrictive orders. But in today's living, where the modes of communication range from making phone calls, sending text messages, leaving Facebook posts, to sending instant-messages, is there a respectable convention?

No matter how technology progresses, the modes of communication can be categorized on a spectrum of attention-seeking. Off at the highest end is calling on the phone or video-calling on Skype; it's hard to multi-task while doing that. Off to the other end of the spectrum are methods like sending emails (suppose the recipient checks email consistently), leaving Facebook posts, or even sending text messages. For these, at the moment the information is passed on, the recipient can choose whether or not to put his or her attention onto it. He or she also chooses to reply at a moment of convenience. In-between is sending instant-messages. While the recipient can choose to pay attention and response at his or her discretion, there is a modest amount of attention beheld, for a response is expected soon; otherwise, it turns into relaying messages back-and-forth.

The most crucial component of a piece of information that dictates its communication method is its urgency. If it's an urgent information, it justifies seeking the immediate attention of the other. Here's an illustration. Suppose you're meeting a friend at 12:00. If you realize at that day 11:50 that you can't make it today, the best bet is to call, lest the friend is already on his or her way. This is an urgent message, and that justifies seeking the attention of the friend, regardless what the friend was doing at the time. Now suppose it's one week before the scheduled meeting, and it needs to be rescheduled. All of the forms of communication are acceptable, but methods toward the bottom of the attention-seeking spectrum are most appropriate. These non-attention-seeking methods will be able to convey the necessary information in time to serve its purpose (to schedule a new meeting time in the upcoming week).

Of course, there is nothing inherently "wrong" with calling the friend one week in advance purely to say that the meeting needs to be canceled. Instead, it's a probabilistic inconvenience. Go back to the moment one week before the scheduled meeting. The friend may be idle at the moment you call, in which case there's no real detraction from calling. However, what if the friend is really busy at the time, such that taking the non-urgent call disturbs his or her actions? Let's use the concept of utility, and specifically, the mutual utility of having the information successfully communicated, and the change in personal utility from picking up this information in the particular method. In the disturbed case, the friend's personal utility decreased due to the disturbance, but no mutual utility is gained from having the information successfully conveyed instantly. This wouldn't be true in an urgent situation, where if the information isn't successfully conveyed within time, the mutual utility plummets. Back to the case though, there can be no gain from using the attention-seeking communication method, given that the probability of non-attention-seeking methods getting the information across successfully is almost certain. Instead, regardless of what the probability that the friend is super busy at the time, the total change in combined utility will be non-positive. It could be unchanged, but it can decrease; by no way will it increase.

That's why making a non-urgent phone or video call is inefficient for both parties. If the information to-be-conveyed truly is not urgent, there are no benefits from utilizing the attention-seeking method of communication. Of course, some can argue for the increased heartfelt happiness as a result of those more intimate communication methods. Well, here we are assuming that there are no such effects. Amorous environments are of another realm, because when one tries to quantify love, well, we lose quantifiable results.

Friday, April 6, 2012

Comparison of Apple and GDP

Apple Inc. (NASDAQ: AAPL) has been dominating the news. Its shares opened the year at $409.40. Barely more than one quarter into 2012, the prices closed Thursday at $633.68. This is a whopping increase of 54.78%, and some analysts predict a climb as high as $1000 per share. Already with the current prices, the market capitalization (which is the simplest way to measure how much a company is worth) of Apple is around $590.82 billion. How does this compare to the GDP of major world economies? How do the per-employee figures of Apple compare with GDP per capita of major world economies?

The CIA World Facebook provides the latest figures of GDP. Specifically, the numbers are expressed in purchasing power parity (PPP), which is the "sum value of all goods and services produced in the country valued at prices prevailing in the United States." According to those figures, the GDP of the United States is just about $15 trillion, just slightly below that of the European Union. China comes second at $11.29 trillion. Apple's market capitalization of $590 billion puts it right underneath the GDP of Thailand at #25 ranking in the world. No African countries eclipse the figure, but South Africa would come right underneath with $555 billion.

According to 10-K form filed by Apple on September 2011, Apple claimed that it had "approximately 60,400 full-time equivalent employees and an additional 2,900 full-time equivalent temporary employees and contractors." Using the figure of 60,400 employees, Apple's worth per employee in terms of market capitalization would be around $9.78 million. In 2011, Apple reported $25.9 billion of net income, or about $430,000 per employee. In comparison, according to the CIA World Factbook, Liechtenstein, the Central European country with a population barely above 36,000, had the highest GDP per capita at $141,100.

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Thursday, April 5, 2012

Yahoo! Inc (NASDAQ: YHOO)

It was announced Wednesday by the ADP, the payroll processor, that the private sector in the United States added over 200,000 jobs in March. Nearly half of them were added by small businesses. On the same day, Yahoo announced that it would cut its workforce by 2,000, which is 14% of its employees and the largest layoff in the history of the company in its 17-year history.  The cuts will help save about $375 million annually, and this was the first major decision under new CEO Scott Thompson, who was quoted to say that these cuts were needed to make the company “smaller, nimbler, more profitable and better equipped to innovate."

Shares of Yahoo actually climbed 9 cents to close at 15.27 Wednesday. But these figures are way shy of the company's heydays. Shares topped over $100 in early 2000, and even as late as 2005, topped over $40. While the S&P has recovered the losses since 2008, Yahoo's shares have not climbed above $20 since end of 2008. Financials show that total annual revenues have fallen from $7.2 billion in 2008 to just under $5 in 2011. In fact, Yahoo's revenue of $353,000 per employee is far below the $1.2 million mark observed in Google and Facebook, and also less than half of that of Microsoft. Much of these figure underscore the failure of Yahoo to capture social networking and competition it faces in advertisement. In recent months under Thompson, Yahoo has also sought to sue Facebook for patent infringements. Facebook has filed a countersuit against Yahoo.

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Wednesday, February 29, 2012

LinkedIn Corporation (NYSE: LNKD)

Launched in 2003, LinkedIn has grown to be world's largest professional network with over 150 million users, with the majority located outside of the United States. In 2011, LinkedIn members performed over 4.2 billion "professionally-oriented searches" on the platform, on which over 2 million companies have public profiles. Remarkable, considering that it is almost nearing a decade in operation, is the continuous growth. For 2011, annual revenue was up 155% and stood at $522 million. This follows performances in 2009 and 2010, which saw revenue grow annually at 52% and 102%, respectively. Members, unique users, and page views in 2011 all increased around 60%.

LinkedIn still trumps Twitter and Facebook when it comes to use from recruitment companies. While the latter two are experiencing rises in the use for recruitment, LinkedIn maintains its edge as it is "geared up as a professional networking facility." The internal news section, LinkedIn Today, is filled with business- or career-oriented stories, and have Wall Street Journal, CNN Money, and Bloomberg as some of its top sources. This is a wide contrast to Facebook and Twitter, which are social networks without any specific categorizations.

This past week, Linked acquired the start-up Rapportive for 15 million in cash. Rapportive is a Gmail plugin that shows users the latest social network updates from others that the user corresponds with. CEO of Rapportive has mentioned that the services will be supported by LinkedIn. The service will allow users to skip the Google search of names, thereby "cutting off Google+’s opportunity to steal the click."

At the closing of trading on February 28, LinkedIn traded at 86.95. With a market cap of $8.38 billion and annual net income of $11.9 million in 2011, the P/E ratio is at a whopping value greater than 700. Google and Yahoo both have values at or around 20. In terms of price-to-sales ratio, the value of 16 is still significantly high, but is lower than Facebook's projected value. One reason for the high price ratios of LinkedIn is its relatively low profit margin. At 2.28% for 2011, it is drastically lower than Google's 25.69%. However, looking at the 2011 income statements, an amount of $132 million, or about 25% of the total revenue, was spent on research and development, nearly doubling Google's figure of 13.6%. Whether or not LinkedIn can sustain the recent growth, and whether or not the heavy research and development can lead to continuously innovative services will ultimately decide the trajectory of LinkedIn.

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Monday, February 13, 2012

Apple (NASDAQ: AAPL) Pushes Above $500

Apple has toppled the $500-per-share mark for the first time, but the climb may be far from over. Since the January 24th announcement that Apple posted net income in excess of $13 billion and sales in excess of $46 billion, which is more than double, and up 73% from previous year, respectively, Apple's share has soared from around $420 to climb over $80, nearly 20% gain, in less than 3 weeks. Apple had been in contest with Exxon Mobil as the largest company, but with a market valuation of $465 billion, it is now the conspicuous spearhead.

What's next for Apple? While the release of iPad 3 will be highly anticipated in March, the prospect of dividends has certainly fueled the continual rise. Former CEO Steve Jobs was opposed to dividends, but that could begin to change in the shareholder meeting on February 23rd. A 2.5 dividend yield would translate currently to around $12.50 annual dividend a share. Given the current count of 932.37M stocks and 502.60 closing price, it would cost Apple 932.37M * 0.025 * 502.60 = around $11.7 billion. Even that would only be a fraction of the $17.5 Apple brought in Q4-2011 in cash flow from operations itself. That said, Apple has recently used much of its cash in investments. In the 52 weeks closing at end of Q3-2011, Apple actually saw negative net cash flows. However, with cash and short-term investments totaling over $30 billion as of end of Q4-2011, Apple would still have a solid current ratio of 1.24 if $11.7 billion of short-term investments were removed.

While the shareholder meeting is highly anticipated, analysts believe that the price will continue climbing. Yahoo Finance, through CNBC, quoted Shaw Wu, a Sterne Agee analyst, with a $550 price target on the shares. This meeting and the reception of new iPad 3 will ultimately dictate the direction of the world's most valuable company.

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Wednesday, February 1, 2012

Facebook Ready for IPO

Facebook is just about ready to file for IPO. Morgan Stanley is said to be hired to structure the offering that could see Facebook raise more than $5 billion and see the company formed in 2004 be valued at as much as $100 billion. Most of Facebook's revenue comes from advertising, and that figure was $3.8 billion in 2011. Research firm eMarketer estimates that revenues in 2012 will increase over 50% to $5.78 billion. In the days leading up to today's public filing, much talk has been centered on this $100 billion figure.

Facebook will be three times more expensive than Google was during its IPO. Given Facebook's $3.8 billion revenue and $100 billion valuation, that is a price-to-sales ratio of around 26. For comparison, a Market Watch article discussed valuations of 76 IPOs from companies with at least $3 billion in sales in the 12 trailing months up to IPO. The results reveal that their average price-to-sales ratio was around 0.7, meaning that Facebook's ratio is nearly 40 times that of comparable companies at the time of IPO. Google, to which Facebook is often compared to, had a price-to-sales ratio of 8.7 during its IPO, or nearly 1/3 that of Facebook. According to the latest financials, Google in 2011 had $37.9 billion in revenue. Its latest market capitalization value is $188.61 billion, or about 5 times its latest annual revenue. For Facebook, even with the 50% growth estimates from eMarketer for 2012 revenues, the $100 billion valuable will be over 17 times the annual revenue.

The high valuation of Facebook may rest on the anticipation of continual fast growth. However, the $3.8 billion revenue in 2011 missed the forecast of $4.3 billion from eMarketer. Zynga, one of the biggest advertiser on Facebook, began trading on NASDAQ last December. Up until this past week, its price was consistently below the initial pricing of $10; the recent spike may be attributed to the imminent IPO of Facebook itself. Finally, eMarketer forecasts that growth rates of Facebook's ad revenue worldwide will drastically decrease from 152% in 2010 to 21.1% in 2013.

In an article written by Business Insider and posted on Yahoo, the $100 billion valuation was defended on the basis of Facebook's control of traffic on Internet, personal identity data, and the biggest social platform. Based on these three criteria, the future cash-flow discounted to today's value makes $100 billion a plausible amount. Facebook's high valuation rests on its continual fast growth. That success will ultimately determine whether the $100 billion valuation is appropriate or not.

Sources:

Wednesday, January 25, 2012

Compulsory Transition to Facebook Timeline

It looks as though Facebook this time will indeed transition its users to switch to the Timeline service, whether or not the users like it or not. As a mere new format, Timeline doesn't really reveal anything that was previously inaccessible. Nevertheless, it greatly facilitates the access of information from the past that used to be burdensome to retrieve. Instead of continuously hitting "Older Posts" to go to the past, users now can simply click on the year to instantly jump to the past. In computer science lingo, retrieval of information just went from O(n) to O(1) efficiency. While efficiency is greatly appreciated in computer algorithms, is it necessary good in the case of Facebook? It really depends.

Numerous Facebook users have deactivated their accounts since the inception of the Timeline program. Many remarks have come in that Timeline is "creepy" and "makes stalking easy." Indeed, by making past information much more accessible, Timeline does it make it easy for an user to look into the digital history of others. In anticipation of the changes, Facebook gives users "seven days to clean up their profiles before Timeline gets automatically activated." During this time, users get a preview of Timeline to make the necessary privacy settings before the new page goes public. But that still may be too much hassle for those to go through their scrapbook and change privacy settings, or totally remove, items from the past that they don't want others to see presently.

Facebook has grown with its expansion into complexity, each time facing massive opposition. For those preferring simplicity, Facebook has grown out of touch and function. LinkedIn has become the stream for professional information and contacts. Twitter has become more effective at quickly digesting news and developments, without all of the comments and "likes." What's Facebook good for then? Currently on my News Feed, there are shared pictures, various comments and status updates about people's evenings, among others. Indeed, these seemingly random pieces of floating information are what holds Facebook together. Yet that can be quite useful. These aren't exactly the information one will try to actively search for. Instead, the information comes to them, some useful, most of them not. Facebook also still is the best tool to keep in contact with the average friend. One learns about other's activities effortlessly and can easily communicate, without having to look up email addresses.

Back to Timeline though, it seem as though this privacy issue has concerned many users. However, there should be no concern if one is indifferent about past information being exposed presently. People continuously share too much pieces of information, and don't want it to be easily accessible by all. Ironically, unbridled sharing is what makes Facebook useful. The more information people post, the more useful Facebook becomes for everyone who views that information. But the more information an individual puts out, the bigger chance that the information eventually will get to those unintended. Timeline actually serves as an apt reminder that public digital information is indeed public. Even had Timeline been implemented, the information posted today will still be accessible in the future.

Facebook is still useful. From textbook transactions, campus events, to friends reconnecting, Facebook excels in the expediency and ease with which information spreads. Timeline's quick access helps those looking for useful information from the past. For those concerned about excess personal information going public and the easy access of such from others, don't feed that much information into the system. Don't post that embarrassing status or picture; there is a reason why email or private messaging exists. Instead, use Facebook to share information that doesn't mind being easily accessible forever, or simply use it for passive intake of information. Facebook is a digital archive with information that will stay. The sooner people realize that, the better it can serve all users in what it does best.

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Sunday, January 22, 2012

Behind the Production for Apple

Most of the production for Apple's products are done outside the United States. Is that a good or bad outcome for Americans? Focusing on the labor, it seems as though United States lose these jobs that are outsources overseas. Around 700,000 people work for Apple's contractors, most notably Foxconn. The factory in Shenzhen alone employs 430,000 workers. It's been cited that the necessary skills are more easily found in Asia than the United States. Apple's analysts estimated that it would take nine months to find the necessary number of engineers to oversee and guide the assembly lines; in China, it took 15 days.

But it's not an entirely a loss for United States. Apple is able to charge its products relatively cheaply and retain enormous amount of profit as a result of utilizing the labor in China. As a comparison, Apple retained a whopping 23.95% profit margin in 2011, while Hewlett-Packard (NYSE:HPQ) only had 5.56% and Dell (NASDAQ:DELL) 4.28%. This wealth has benefited individual investors and pension plans. Furthermore, the price of the Apple products would be higher if they were made in United States. Estimates put additional $65 into each iPhone made with US labor. While Apple can still maintain a profit with that increase, it is unsure how much of that hike in input prices will be pushed onto the consumers. However, the bigger issue is still the availability of skillful labor.

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Friday, December 2, 2011

Response to Siri Controversy

Last weekend, I was trying out Siri for the first time and asked the question of "how do I get from Cleveland to New York?" I already had a plane ticket booked for the next day, but I wanted to see how the voice software would respond. To my dismay, I was told "sorry, I can't help you find flights." First of all, where came the assumption that I automatically was looking for a plane ticket? And furthermore, while a quick Google search would bring numerous results, why couldn't Siri find an answer for me?

Recently, it has hit the headlines that Siri can't help users find abortion clinics. This issue seems to have so much salience for abortion groups, that American Civil Liberties Union even launched an online petition saying that "if Siri can tell us about Viagra, it should not provide bad or no information about contraceptives or abortion care. Send a message to Apple: Fix Siri." In response, Apple claims that the omission is not intentional. An Apple spokeswoman stated the omissions aren't meant to offend anyone, but rather "that as we bring Siri from beta to a final product, we find places where we can do better and we will in the coming weeks."

Even if Siri moves away from its beta stage, it's highly doubtful that it will always find what users want, given the limitation of artificial intelligence. From finding restaurants to voice calling, Siri could be quite helpful. But it's not meant to do everything. To balance its usefulness and convenience, it needs, like all other software, a limitation. So far the public knows little of Apple's development behind Siri. Why can't it find flights, when it's easily done on a Google search, just like a restaurant search? Such function must not have been part of Siri's predefined capabilities. But for airline companies to claim that Siri and Apple are against those industries far bends the argument toward exclusive, self-motivated interests.

On a more practical note, those wishing to find abortion clinics could simply Google search for abortion clinics on the iPhone. It would take around a few more seconds to type out the search. It's not that those angry at Siri are unhappy at the inability to find their solutions. It's their discontent at the technology to not include their interests in the limitation of capabilities of the software. Software is as useful as its capabilities. Just like how a spell-check cannot detect all flaws, Siri is not meant to do everything. Only when can people understand that technology has definite limitations, will new software truly be appreciated for what it can offer.

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Wednesday, October 19, 2011

Global Airline Industry: Growth or Decline?

Recently, it was announced that economic growth in China has been slowing down as the government has taken measures to control inflation. During the third quarter, the economy grew at 9.1%, down from previous quarter's 9.5%. This has caused concern as China is the main exporter of goods to the West and area of development for many Western companies. This is particularly true for the airline industry, as rising development has led to more demand of aircraft in the region. This week, it was revealed that China Eastern airline has canceled its order of 24 Boeing 787 Dreamliner planes, citing the withdraw "due to Boeing Company's delay in delivery," rather than any economic slowdown indications. What is the forecast of airline industries given these two recent events?

After the announcement by China Eastern, Boeing remained optimistic. A Reuters article quoted Marketing VP Randy Tinseth in his statement that "as we look forward, we expect to see the Dreamliner order base increase, we expect to see more orders, we expect to see more cancellations, especially as we go through mitigation with our customers." While the development may put more pressure on Boeing to hasten its production rate to its target of 10 units per month by 2013, the outlooks seem promising in other markets. Australia's Qantas Airways, Korean Air Lines, and other Chinese airlines such as China Southern, have all remained committed to introduce the Boeing Dreamliner.

Long-term forecasts may be even more promising. According to Tinseth, "air travel in Northeast Asia is expected to grow moderately at 4.3 percent annually over the next 20 years." Indeed across the emerging markets, the demand for aircraft will remain strong for the next decades to come. Even with China's slowdown, the growth is still hovering at around 9%, compared to that of United States of Europe, which hovers between 1 to 2%. According to Parker Hannifin Chairman and Chief Executive Donald Washkewicz, China's downward trend has "been a short-lived thing and activity picks up again." The optimism is voiced through Boeing, which forecasts 33,500 new aircraft by 2030.

Despite given the recent reports of China's slowdown with its economy and the cancellation of 24 Boeing Dreamliner units by China Eastern, it looks as though that the global airline industry will see growth in the immediate future.

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Wednesday, October 12, 2011

Apple's Strategic Release of iPhone 4S

When Apple announced the debut of the iPhone 4S last week, disappointment was prevalent, as many looked forward to the release of iPhone 5. But iPhone 4S was a success. Over a million units of the phone was preordered in the first 24 hours of opening. This toppled the record held by the iPhone 4, which saw over 600,000 preorders in the first 24 hours. This time around, the numbers are greater as Sprint joined the group and also sold the phone under its carrier. But the numbers show that clearly, iPhone 4S was not a disappointment.

The judgement of who would actually buy the new iPhone was crucial in the launch of the iPhone 4S, rather than the iPhone 5. Most users of the current iPhone 4 are still under the two-year contract plan, signed around mid-2010. So Apple wasn't even targeting those users hoping to upgrade their phones. In fact, to the 70 million users of iPhone 4, Apple hoped that this wouldn't a spectacular upgrade, so not to disconcert them in being stuck to another year of contract. Instead, Apple hoped to entice users of iPhone 3G and iPhone 3GS users with a huge contrast to their products. At the same time, by making the iPhone 3GS free, Apple also hoped to entice new users to the smartphone market.

Various analysis have predicted that Apple will shatter its own records in the number of iPhone 4S units sold this quarter. That's not bad considering the initial disappointment it received after the showcase of its newest product. Consumers can only guess what will happen when Apple is most likely going to release the next generation of iPhone next summer.

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Tuesday, October 4, 2011

Kindle Fire Pricing

When Amazon unveiled the $199 tablet computer Kindle Fire, people began speculating that a rival product to Apple's iPad, whose cheapest version is $499, has finally arrived. Indeed, at $300 or 60% cheaper, Kindle Fire, which may lack some of iPad's functionaries, seem to be somewhat of a bargain. News came out today that Amazon might actually be losing money for each unit of Kindle Fire sold. Although estimates vary, the estimated cost put into each unit of Kindle Fire is about $210. Amazon would need to sell $10 of other goods, such as music or apps, just to break even.

Predatory pricing may be the strategy Amazon is going after. By intentionally charging a lower price, the firm hopes to entice customers. When the item is sold, also carried along is the brand name of the product and other related product. Amazon already has a huge presence in the market, and has a huge inventory of items ready to be sold, that may be compliment products to the tablet. By tying the goods together, Amazon may be hoping that the lower pricing on Kindle Fire may draw customers to buy more of its other goods. Indeed, compared to other Android competitors, "the real benefit for Amazon in entering the tablet space is the advantage of a direct, established, sales model on Amazon.com."

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