Explaining Southern California's economy

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. 


Yelp IPO: At least the bankers will make money

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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. 


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.


Unemployment: We may have finally turned the corner

A jobs sign hangs above the entrance to


A jobs sign hangs above the entrance to the US Chamber of Commerce building in Washington, DC.

The national unemployment rate has been falling faster that anyone expected it would. You can debate the numbers. For example, are we currently at 8.3 percent because the so-called "long-term unemployed" have given up and dropped out of the labor force altogether? Maybe. But there's no arguing other data, some of which is starting to look a lot better.

This is from Bloomberg:

The number of Americans filing first-time claims for jobless benefits fell to a level matching a four-year low, more evidence the labor market is healing.

Applications for unemployment insurance decreased 2,000 in the week ended Feb. 25 to 351,000, Labor Department figures showed today. Economists forecast 355,000 claims, according to the median estimate in a Bloomberg News survey. The number of people on unemployment benefit rolls fell, while those getting extended payments also declined.


The four-week moving average, a less-volatile measure, fell to 354,000, also the lowest since March 2008, from 359,500.


Why Apple won't become a $1,000-per-share company

Apple's New iPhone 4s Goes On Sale

Justin Sullivan/Getty Images

Apple Store customers look at the new Apple iPhone 4Gs on October 14, 2011 in San Francisco, United States. The new iPhone 4Gs features a faster dual-core A5 chip, an 8MP camera that shoots 1080p HD video, and a voice assistant program.

Apple finished up the day at $545 a share. So it's almost halfway to being a $600-a-share company. Which would put it $400 from being a $1,000-a-share company. And there's a raging debate right now in the financial world about whether Apple can make it across that finish line and become the first-ever $1 trillion market cap company. 

For perspective, no one has even even gotten close. And $1 trillion is about as much money as has been made on the Internet in its entire history so far. Big number. Very, very, very big.

At Business Insider, former tech stock analyst (and BI CEO) Henry Blodget makes what I think is the best case against Apple getting to $1,000 a share:

The most extraordinary aspect of Apple's business right now is not its revenue growth, which is plenty extraordinary. It's its profit margin.

In fiscal 2011, Apple had a mind-blowing 24 percent net profit margin.

Why is that mind-blowing?

It's mind-blowing because hardware companies just don't have profit margins like that. Even software companies don't usually have profit margins like that.

The hardware business is generally a cut-throat commodity business with razor-thin profit margins.

Dell, for example, which used to be considered a talented hardware manufacturer, has a 4 percent profit margin. HP, which sells hardware and software, has a 6 percent margin. IBM, which sells hardware, software, and services, has a 15 percent margin.

So you can understand why Apple's profit margin is mind-blowing.

And—here's the important point—Apple's mind-blowing profit margin may well be a temporary aberration.