While You Were Working - February 1
More on GE
Following up on yesterday’s news about Deutsche Bank analysts being down on GE, Bloomberg does a deep dive today on how GE became “an astonishing mess.” The story pulls no punches and lays much of the blame at the feet of recently departed Chairman and CEO Jeff Immelt. Here are a few of the spicier tidbits:
“GE hasn’t inspired awe for some time now: The company had to be bailed out in 2008 by the federal government and Warren Buffett, and across the 16-year tenure of recently departed Chief Executive Officer Jeffrey Immelt its stock was the worst performer in the Dow Jones industrial average.”
“GE’s total return on Immelt’s acquisitions has been half what the company would have earned by simply investing in stock index mutual funds.”
The article also points fingers at the rise and fall of GE Capital and good ol’ hubris. GE thought its managers could manage anything; and that has proven to not be the case. The article also makes a few good points about the troubling timing of GE’s troubles.
“GE’s decision to cut its dividend wouldn’t have been so surprising if it hadn’t spent $49 billion on stock buybacks over the previous three years.”
“What’s additionally baffling about GE’s difficulties is that there’s no surrounding global financial crisis, no chorus of sober-minded people fearing for the future of capitalism itself. Rather, the company is flailing while the world’s major economies are all robustly growing. It’s the exact sort of moment when GE’s global scale should be an advantage.”
How GE manages to navigate the next year or two will obviously be critical. For if it can’t even manage to shine in the good times, how will it ever manage another financial crisis? And one big downside of shedding some many lines of business since the last crisis is that GE probably won’t be viewed as worthy of a bailout during the next crisis.
Trouble ahead for PayPal?
PayPal got a bit beat up by the market today after eBay announced it was dropping PayPal as its primary payments processor in favor of Amsterdam-based Adyen. Rather surprisingly, PayPal executives downplayed the importance of the move, even though eBay delivered 13% of PayPal’s transaction volume. PayPal’s share price has doubled over the last year, but I am not exactly sure why because it seems to be facing a perfect storm. PayPal has failed to monetize Venmo in any kind of optimal way and now Zelle, a long-in-development competitor backed by a consortium of the largest banks, has finally launched and is enjoying a serious marketing push. Amid those factors, it seems like losing 13% of transaction volume isn’t something PayPal should just be shrugging about.
If PayPal isn’t careful, it could become the MySpace of the payments industry – that early disruptor that had a great run and then faded when something better came along. PayPal boss Dan Schulman is wicked smart; but he might have to act sooner rather than later to protect PayPal’s turf. In fact, I think a move to drop the PayPal name altogether and become Venmo might not be a bad idea; just so it stays top of mind for all the cool kids.
Time for a craft brewing catharsis
These are frothy days for beer drinkers as the number of craft brewers has more than tripled in the US since 2009. Any beer drinker will tell you that more choices at the tap is a good thing – even if it can be overwhelming. However, there is one supply-and-demand part of the craft brewing binge that I don’t understand: With all this competition among craft brewers, why is the price of a pint of beer skyrocketing?
Leveraging the power of real-time economic data
This analysis by The Financial Times does an excellent job of outlining the potential of using real-time data to crunch the numbers on things like GDP, unemployment and other economic indicators. Data that used to be the realm of only big-spending hedge funds is becoming ever more accessible. And boy is there a lot of it:
“The trail of our digital exhaust is incomprehensibly vast. The world’s annual data generation is estimated to be doubling every year, and the overall size will reach 44 zettabytes (that’s trillions of gigabytes) by 2020, according to a study by International Data Corporation. If all this information was placed in high-end tablet computers, the pile would reach from Earth to the moon more than six times over.”
The fact that central banks and other government entities are starting to delve into this data to improve their information can only be counted as a good thing. However, I look forward to the day when such real-time data can be used to drive dynamic pricing in markets beyond just sports and concert tickets. Like craft beer prices! Should a six-pack of craft beer really cost the same when I buy it at 3pm on a Tuesday as it does at 8pm on a Saturday?
What I am getting at it is rather than just leveraging real-time data to tabulate economic results, why not use it to drive economic results?
Is the Aramco IPO nothing but a mirage?
With every story about the long and convoluted process of Saudi Aramco trying to select an IPO venue, I become more and more skeptical that the IPO will ever take place at all.
Ahead of the Super Bowl
This is the most comprehensive breakdown of the NFL’s ratings problem I have read to date. Here is a hint: There’s more than one cause and the problem isn’t going away anytime soon.
- Cue your Dr. Evil voice because Alphabet booked $100 billion in yearly revenue.
- It ain’t easy being green … especially for a Big Oil company.
- This is rather inconvenient for Amazon.
- Airbnb is not going public this year.
- Space for rent … in the Empire State Building.
- Maybe next week will be the week.