Monday, January 29, 2007

Silicon Valley is rebooting

Wall Street Journal published an article based on a report by Joint Venture Silicon Valley, nonprofit group in California.

Conclusion of the report: Silicon Valley's nascent economic recovery gathered steam last year, with the nation's technology capital adding more than 30,000 jobs and showing gains in areas such as average annual wages and household income.

Doug Henton, a co-author of the report, says Silicon Valley is undergoing a structural shift in which lower-skilled jobs are moving out of the area to be replaced by jobs requiring higher skills such as design and specialties in certain technologies.

The report comes as Silicon Valley, which prospered during the dot-com frenzy in the late 1990s, has struggled to remake itself in the wake of the tech crash in 2000. In the years since, the region has experienced job losses and a slowdown in growth at many tech companies. The area began to turn the corner in 2005 when a net gain of 2,000 jobs was recorded, the first time since 2001 that there had been an overall increase in jobs. Start-up activity has also become widespread again, with Internet firms specializing in online video, social networking and "clean technology" springing up.

For the 12 months through the second quarter of 2006, Silicon Valley added a net total of 33,252 jobs, which translated to a 2.9% rise in jobs, according to the Joint Venture report. Meanwhile, the region's unemployment rate declined last year to about 4% from nearly 5% in 2005 and down from a peak of nearly 8% in 2002. Many tech companies, from start-ups to larger companies, have recently complained that it has been difficult to hire and fill open jobs. Wow… That’s nice…for a change!

Friday, January 26, 2007

How to Compete in a Global Economy

If your goal is to get senior management positions, overseas experience is a must. It was an unwritten rule. Now, it's a written rule.

U.S. News & World Report ran a story on this. Read more in this link: http://biz.yahoo.com/weekend/globaleconomy_1.html

Thursday, January 25, 2007

Existing Home Sales Plummet in 2006

News from AP: Sales of Existing Homes Plunge by Largest Amount in 17 Years

Sales of existing homes fell in December, closing out a year in which demand for homes slumped by the largest amount in 17 years.

The National Association of Realtors reported that sales of existing homes were down 0.8 percent last month, a bigger decline than had been expected. For the year, sales fell by 8.4 percent, the biggest annual decline since 1989, when existing home sales fell by 14.8 percent

The sales figure underscored the sharp contraction that is going on in the once high-flying housing market, which before last year had set sales records for five straight years.

Even with the sharp drop in sales last year, the median price of an existing home sold in 2006 managed to rise a slight 1.1 percent. But that was far below the double-digit gains during the boom years. The median home price had risen by 12.4 percent in 2005.

After a five-year boom, housing slowed significantly last year, which has caused ripple effects throughout the economy with rising job layoffs in construction and other housing-related industries.

But economists said they believe the low point for housing has been reached and they are forecasting a slow rebound in 2007. Because of that optimism, analysts don't believe the slump in housing will drag the overall economy into a recession.

The 0.8 percent drop in sales in December came after two straight months of improving sales, the first back-to-back sales gains since the spring of 2005.

David Lereah, chief economist for the Realtors, said that even with the December setback, he still believes that sales of existing homes have hit bottom and will start to gradually improve.

I don't believe Lereah guy, he is paid to talk like this. Someone even started blog watch on this guy.

Tuesday, January 23, 2007

Sallie Krawcheck


Talk about bad timing. I wrote a detailed article on Sallie and her rise to the top. I even concluded that article mentioning that she would be the next CEO of citigroup. Sallie was asked to move to wealth services division, just when I was about to publish my posting. Well, it doesn't matter now.


I think Sallie lost her chance to become CEO of citigroup. Her performance as CFO didn't impress investors, they basically asked for her head on the plate. Citi CEO Prince doesn't want to do that. Sallie got some kind of graceful exit.

Sunday, January 21, 2007

God gets spam too!

I read the article about Hell.com. If you haven't heard about that site, that's not a surprise, because that site is secretive online community.

There is another site called Heaven.com; Heaven is not as popular as Hell! Hell.com, Heaven.com... How about evil.com, good.com, I-am-a-very-bad-guy.com, You-are-so-cute.com, go-to-hell.com, etc.,? If I buy these kind of domains, can I sell those domains for million dollars also? Hell.com episode shows that we are not in late 90s craze. People are getting more sense, they try to evaluate the business before paying lots of moola. Well, atleast some people are cautious.

Heaven.com gets lot of traffic, but still that site generates only $5 or $6 a day thru ads. Experience of Heaven.com offers a cautionary tale for any would-be buyers of Hell or any other site like that.

Heaven.com gets different kind of web traffic too. It has an email address: God@Heaven.com. This site's founder reports that he receives several thousand emails daily. Like the rest of us, God gets lots of spam, according to the site's founder.

Tuesday, January 16, 2007

Googlifornia

There are talks about Google buying Iran so that we don’t need to worry about nuclear war! Forget those fake stories, here is a true story:

After cashing in more than 9 million shares valued at $3.7 billion in 2006, 16 Google insiders will owe the California State as much as $380 million in taxes — enough to cover the salaries of more than 3,000 state workers. Taxes paid by Google founders Sergey Brin and Larry Page account for nearly half the amount. There is virtually no way for them or other California billionaires to escape a 9.3% state capital gains tax or a recent voter-approved 1% tax on the wealthy to underwrite the state's mental health programs.

In the often slippery world of state finance, the wildly successful Google has had an unusually quantifiable effect on California's budget. It has become the face of an extraordinary two-year resurgence in state capital gains and stock-option revenue, much of which can be traced back to the tech sector. As Google's stock topped $500 last year, company executives continued to sell hundreds of thousands of shares each month, according to an analysis of insider transaction data by research firm Thomson Financial.

Commenting on Google’s tax money, California's Finance Department’s spokesman H.D. Palmer said, “"On behalf of a grateful state, I'll be happy to wash their windows or mow their lawn!”.

Thursday, January 11, 2007

ICE, ICE, ICE... you are so Nice, Nice, Nice...

If you had bought ICE when I wrote about on November 16, 2006, you would be a happy person today. ICE is still going strong. Have your stop loss in place and enjoy the gains!




Update: Jim Cramer told his mad money crowd today to take some profits in ICE, so you will see little price pressure for next few days.

Bulls finally get to see “Happy” New Year!

Market is getting active after initial dull days in 2007. Investors regained confidence today, sending stocks higher after oil prices plunged and a drop in jobless claims. Dow rose 72.82 to 12,514.98; Nasdaq rose 25.52 to 2,484.85.

Weekly jobless claims fell 26,000, to 299,000 and that marked the lowest number of new claims in six months. It shows that fundamentals of economy are still strong.

Nasdaq blew through its six-year high of 2470! Volume was solid for both the Nasdaq and NYSE. Nasdaq had a beautiful bounce of support at its 50-day moving average (2421) last week. Now, it has support at 2460. May be this is the year Nasdaq will see a decent gain and finish above 3200, I hope so.

Hmm, once upon a time we were celebrating Nasdaq 5000. Now, we are hoping for 3200!

Wednesday, January 10, 2007

NYSE acquires stake in NSE, India

New York Stock Exchange along with Goldman Sachs and other foreign investors agreed to pick up a combined stake of 20% in India’s National Stock Exchange. The NYSE Group is buying a 5% stake for $115 million in cash, valuing the NSE at $2.3 billion. Goldman Sachs, General Atlantic and Softbank Asian Infrastructure Fund will also acquire 5% each. The deal is expected to close in the first quarter of 2007.

NSE will not get any proceeds from the transaction. Domestic shareholders including ICICI Bank, Industrial Finance Corp. of India, IL&FS Trust and Punjab National Bank sold some of their stake to the foreign players.

National Stock Exchange Managing Director Ravi Narain said of the deal: “As Indian businesses grow global, and the mindset of our customer base grows global, it’s inevitable that financial markets make plans to go in that direction.”

India’s stock indexes have risen sharply in the past year as investors poured money into companies, their confidence bolstered by strong economic growth of over 8%, the government’s move to increase foreign investment in several key sectors and growing consumer demand. The National Stock Exchange’s flagship Nifty 50 index crossed the 4,000 mark for the first time last month. In 2006, the average daily traded value in equities on the National Stock Exchange was around $2 billion and the notional average daily traded value in equity derivatives was around $7 billion.

It's another positive sign for Indian Stock Market. When more people trade, stock exchanges make all the money. Investors and traders either lose or win. Stock exchanges don't lose.

You can read the complete article here.

Destroy the Competition!

"Destroy the competition" - One business owner took this advice literally and set the competing shop on fire. David Allen wrote about this in his blog. You can read more about this here.

The business owner faces 25 years in prison now, if he is found guilty. People do all kinds of things thinking that no one will find out about them. Well, only problem is that these guys are so stupid that they leave evidence and then set the competing shop on fire. There is a basic psychology to it, when people are very emotional, brain just stops working.

Monday, January 08, 2007

Speculators Helped Fuel Florida's Housing Boom

Wall Street Journal wrote another article about how speculators drove up the housing boom. If you are a subscriber, you can read that here.

Florida Housing Bust House bought for $621k in Oct 2005 was sold for $250k in Oct 2006.

House bought in September 2004 for $435k was sold for $275k in October 2006.

$690k investment in July 2005 fetched $400k in October 2006.

One of the investors said ""This market downturn came out of nowhere, like a snowstorm...It surprised everybody, especially the people making mortgage payments."

I keep writing about real estate bubble in India. There are so many real estate speculators in all metro cities in India. All these guys think that flipping land to IT companies is a sure-fire way to get ultra rich. Many people think that there is no bubble in India, nothing will happen to real estate market in India and so on. Like the Florida investor said it would come like a snowstorm.

Technology outsourcing in 2007

A research report suggests business transformation to accelerate technology outsourcing in 2007. It also finds India to be the favorite top destination for IT Services.

NeoIT, a California-based consulting firm, predicts the services globalization industry to continue to grow at a brisk rate of 25-30 percent in the coming year. This owes to the fact that more and more companies will look for services globalization initiatives.

Atul Vashistha, NeoIT CEO says, "Business transformation through services globalization is one of the most important levers that global companies can no longer afford to ignore."

India will continue to be the top destination for IT services, but buyers will look for cities of excellence in other countries, too, where they can leverage employee skills.

This is according to the research, which echoes the predictions of Tholons, a Washington DC-based investment advisory and management firm, when it released its report last month.

Both firms predict that M&A activity will increase this year, with outsourcing services companies buying consulting firms or those firms that have local knowledge in the countries where their customers reside.

The trends in 2007 will see companies from developed countries buying firms in countries like India, the Philippines and Russia to gain access to lower-cost talent, forecasts the consulting firms.

Wednesday, January 03, 2007

$100 Laptop

MIT lab started this project two years ago. $100 laptop is going to be a reality this year. Many people are impressed with quality and reliability of the laptop and the XO operating system it runs on. There is a new interface called "Sugar".


Initially this laptop is going to be sold for $150. The price will reach (the original estimated price) $100 once mass production starts. Many countries expressed interest in these laptops. India expressed interest initially, but backed out, I am not sure why.

This laptop has battery charging system that was operated by hand, yes, hand! Just like the emergency torch light you get in costco, there is a mechanical lever on the side, you just give it a whirl, your laptop is charged. This laptop is mainly targeted at developing countries, so it is not relying on any electrical power. It runs on slimmed down Linux, with 512MB flash memory. No hard disk. Some guys even tried audio/video conference with this laptop.

There are lot of sites where you can learn more about this project. Best place to start is Laptop.org. Another site of interest is the blog that follows the One Laptop Per Child (OLPC) project.

Monday, January 01, 2007

Preview of 2007

2006 is a good year for investors. If I said this in Dec 2005, many people would not have believed it. 2006 went ahead with full charge in spite of inflation, Iraq, Iran, and Oil price increase. Total assets in the mutual-fund industry crossed the $10 trillion-mark for the first time in October, according to ICI (Investment company Institute).

Many fund managers waited for pull back in October to jump in the rally that was started in July. That pull back didn’t happen, so many fund managers’ performance is lagging behind S&P 500 index in 2006. Fewer than 20% of U.S. fund managers running diversified stock funds that try to beat the market managed to top the Standard & Poor's-500 this year, according to data-tracker Lipper.

Driven by a splurge of deal-making, a halt in the Federal Reserve's campaign of raising interest rates and continued profit growth, the Dow Jones Industrial Average completed its best year since 2003, gaining 16%. Lot of investors are now itching to get in the party, that would drive the stock market higher in 2007.

For 2007, outlook for stock market looks brighter. Employment numbers remain strong, that should compensate for housing slowdown. Third year of presidential term is always a good year for the stocks. Government tends to take lot of economy-boosting decisions in that year. (Are they not supposed to do that all the time?!) So, 2007 should be a good year. Bumper crop of bonuses on Wall Street could also find their way into stocks.

Emerging markets keep marching higher. You may not get the same spectacular results we had in the past few years, but it should still return decent numbers in 2007. All the fund managers focus on BRIC (Brazil, Russia, India and China). Out of these four countries, India and China still has some room for stocks to climb. However, many analysts believe that India and China are in bubble stage. Investing in Russia is not for faint-hearted.

If you are investing in India, enjoy your gains. Market will go higher before retreat. Always have your stop losses in place. Many Indian investors know that they are in somewhat bubble stage in both stock market and real estate. Their hope is that nothing will happen for next few years. Only problem is that bad things happen in stock market only when you don’t expect it. The bottom line is that always monitor your investments especially if you are in India and China.

Gold will rise further from current levels. Silver will also see some healthy market. Zinc mining companies should see lot of buyout offers from established players.

US$ will go down little. That should also help push Gold price up higher.

Large cap stocks already attracted lot of optimists in 2006. They should see more gains in 2007.

REITs performed very well in 2006, that momentum should continue into 2007. If Fed cuts rates in May 2007, that will drive up the momentum further.

Lot of deals happened in 2006. Lot more deals are expected in 2007. That should give tremendous boost to the market.

Good Luck to all the readers. I wish you very Happy New Year!