Explaining Southern California's economy

Apple and the jobs 'multiplier effect'

Apple-Jobs-Study

Apple

Should we be thankful for all that Apple has given us, including jobs?

Apple seems to be getting a little nervous about its self-image. First the technology giant, currently the world's most valuable company, came under fire for labor practices in China. In Asia, Apple keeps something like 700,000 people working, at numerous suppliers and contractors (at pay levels that would horrify the average American six-year-old on an allowance). In the U.S., however, the company has less than 50,000 people on the payroll, according to the New York Times

And as tech firms go, that's a lot. Facebook, for example, employs less than 5,000 people. To combat the impression than it's basically in the business of exporting employment in order to maintain its 30-percent profit margins, Apple commissioned a study to bolster the idea that it has directly or indirectly created more than half a million jobs (throw in another 200,000 or so if you count the developers who create apps for Apples devices), and that its business activities produce a "multiplier effect": for every job Apple directly creates, it generates, say eight jobs somewhere else in the American economy.

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Tim Geithner discovers the shadow banking system

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Robert Giroux/Getty Images

US Treasury Secretary Timothy Geithner

Treasury Secretary Tim Geithner has an op-ed in the Wall Street Journal today in which he makes the case for financial reform based on a "It's déjà vu all over again" argument. We had "financial crisis amnesia" when the financial crisis struck in 2008 — and in 2012, we the amnesia has returned.

But Geithner has his own form of amnesia. Specifically, he's forgotten his role in bringing the financial crisis about in the first place. Here's an excerpt:

Regulators did not have the authority they needed to oversee and impose prudent limits on overall risk and leverage on large nonbank financial institutions. And they had no authority to put these firms, or bank holding companies, through a managed bankruptcy that wound them down in an orderly way or to otherwise adequately contain the damage caused by their failure. The safeguards on banks were much tougher than those applied to any other part of the financial system, but even those provisions were not conservative enough.
 
A large shadow banking system had developed without meaningful regulation, using trillions of dollars in short-term debt to fund inherently risky financial activity. The derivatives markets grew to more than $600 trillion, with little transparency or oversight. Household debt rose to an alarming 130% of income, with a huge portion of those loans originated with little to no supervision and poor consumer protections.

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Smartphones: Can they catch on in the developing world?

Jerome Favre/Bloomberg via Getty Images

A member of the media examines the Samsung Electronics Co. Galaxy Nexus smartphone, running Google Inc.'s Ice Cream Sandwich Android operating, system in Hong Kong, China, on Wednesday, Oct. 19, 2011. Samsung will begin selling the first mobile phone run on Google's new operating system next month, counting on facial-recognition security to help challenge Apple Inc.'s iPhone.

At Slate, Matt Yglesias rolls out a chart that shows the astonishing adoption rates of both Apple's iOS and Google's Android. So yes, both mobile operating systems have done more than caught on — they've taken over the world.

The developed world, that is. And this is where I think Yglesias overreaches:

In terms of adoption rates, iOS blew the previous entrants out of the water and now Android is setting a new even more amazing record-breaking pace. This is going to be an especially important development in relatively poor countries while mobile connectivity is generally better than wireline, so the availability of relatively cheap relatively powerful mobile devices is a total gamechanger. 

He's making the healthy assumption that these operating systems are going to be adopted in the developing world. iOS runs on only Apple devices — and Apple devices are very expensive, even by developed-world standards. 

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Yelp IPO: At least the bankers will make money

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kurare/Flickr

Yelp.com is a crowd-sourced review site.

Yelp, that restaurant-review startup that everyone kinda sorta uses but that no one really feels all that passionate about (it's no Foursquare, it's just always, you know, there) staged a very successful IPO today, with its stock price rapidly rising well above the offer price of $15.

Sounds great, except of course that Yelp hasn't made any money since 2004 and has a business model that entails massive outlays on local ad sales staff to keep the cash coming in. At Business Insider, Henry Blodget is utterly appalled

I'm surprised he didn't address the "low float" and IPO-underpricing questions (he has before, regarding LinkedIn's IPO). Yelp sold a little more than 7 million shares. I don't have the exact number, but if recent history is any indication, this is only about ten percent of the company. 

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Dunkin' Donuts: The return to California, by the numbers

dunkin' donuts to california

Photo by Qfamily via Flickr Creative Commons

Is this a match for Starbucks in California?

There haven't been any actual Dunkin' Donuts stores in California since the 1990s, but that's all about to change. This isn't you father's Dunkin' Donuts. This is a whole new, amped-up, recently IPO'd and private-equity enabled Dunkin' Donuts. Not a cheerful place to stop in for a delicious coffee and and sticky ring of fried dough, but Starbucks worst nightmare.

Dunkin' Donuts, which has become something of a hipster alternative to 'Bucks, has almost no presence west of the Mississippi. However, following its $400 million initial public offering last year, it's putting itself under pressure to grow. Understandably, given that it's stock price has bumped along in a narrow trading range since its successful debut (it came out at $19 and has lived reliably above that ever since). But it's trading at 100 times earnings (not unusual for a newly IPO'd company), which means that investors are expecting this sucker to go someplace.

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