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Archive for the ‘Economy’ Category

U.S debt to rise to $19.6 trillion by 2015

Posted in Board Of Intellectual Capital, Economy, tagged , , , , , , on June 9, 2010| Leave a Comment »

Here is an article from Reuters.

“The U.S. debt will top $13.6 trillion this year and climb to an estimated $19.6 trillion by 2015, according to a Treasury Department report to Congress.

The report that was sent to lawmakers Friday night with no fanfare said the ratio of debt to the gross domestic product would rise to 102 percent by 2015 from 93 percent this year.

“The president’s economic experts say a 1 percent increase in GDP can create almost 1 million jobs, and that 1 percent is what experts think we are losing because of the debt’s massive drag on our economy,” said Republican Representative Dave Camp, who publicized the report.

He was referring to recent testimony by University of Maryland Professor Carmen Reinhart to the bipartisan fiscal commission, which was created by President Barack Obama to recommend ways to reduce the deficit, which said debt topping 90 percent of GDP could slow economic growth.

The U.S. debt has grown rapidly with the economic downturn and government spending for the Wall Street bailout, the wars in Afghanistan and Iraq and the economic stimulus. The rising debt is contributing to voter unrest ahead of the November congressional elections in which Republicans hope to regain control of Congress.

The total U.S. debt includes obligations to the Social Security retirement program and other government trust funds. The amount of debt held by investors, which include China and other countries as well as individuals and pension funds, will rise to an estimated $9.1 trillion this year from $7.5 trillion last year.

By 2015 the net public debt will rise to an estimated $14 trillion, with a ratio to GDP of 73 percent, the Treasury report said.”

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Roubini Says Rising Sovereign Debt Leads to Defaults

Posted in Board Of Intellectual Capital, Economy, Uncategorized, tagged , , , , , on May 4, 2010| Leave a Comment »

Here is an article from Bloomberg.

“Nouriel Roubini, the New York University professor who forecast the U.S. recession more than a year before it began, said sovereign debt from the U.S. to Japan and Greece will lead to higher inflation or government defaults.

Almost $1 trillion of worldwide equity value was erased April 27 on concern that debt will spur defaults, derailing the global economy, data compiled by Bloomberg show. German Chancellor Angela Merkel and the International Monetary Fund pledged to step up efforts to overcome the Greek fiscal crisis, after bonds and stocks fell across Europe in the past week.

“The bond vigilantes are walking out on Greece, Spain, Portugal, the U.K. and Iceland,” Roubini, 52, said yesterday during a panel discussion on financial markets at the Milken Institute Global Conference in Beverly Hills, California. “Unfortunately in the U.S., the bond-market vigilantes are not walking out.”

Credit-rating cuts on Greece, Portugal and Spain this week are spurring investors’ concern that the European deficit crisis is spreading and intensifying pressure on policy makers to widen a bailout package. Roubini’s remarks underscore statements by officials such as Dominique Strauss-Kahn, managing director of the IMF, that the global economy still faces risks.

Sovereign Debt

“The thing I worry about is the buildup of sovereign debt,” said Roubini, a former adviser to the U.S. Treasury and IMF consultant, who in August 2006 predicted a “painful” U.S. recession that came to fruition in December 2007. If the problem isn’t addressed, he said, nations will either fail to meet obligations or see faster inflation as officials “monetize” their debts, or print money to tackle the shortfalls.

Roubini, who teaches at NYU’s Stern School of Business, told attendees at the Beverly Hilton hotel that “Greece is just the tip of the iceberg, or the canary in the coal mine for a much broader range of fiscal problems.”

European bonds have plunged on concern that Greece’s won’t be able to pay its debt, with Harvard University Professor Martin Feldstein and Templeton Asset Management Ltd.’s Mark Mobius saying a default may be needed. The yield on the Greek two-year bond rose as high as 26 percent after being downgraded to below-investment grade by Standard & Poor’s on April 27, before falling to 17.35 percent today. The euro, which dropped to the lowest in a year yesterday, rose 0.1 percent to $1.3235 at 4:05 p.m. in New York.

Plugging the Leak

Greek Prime Minister George Papandreou met today the heads of the largest private and public-sector unions as well as representatives from the biggest employer group as Greek, EU and IMF officials put the final touches on a package that will allow the country to tap emergency loans. Greece’s budget deficit was 13.6 percent of gross domestic product in 2009, more than four times the limit allowed under European Union rules.

“A default will help to plug the leak,” said Mobius, who oversees about $34 billion in emerging-market assets as executive chairman of Templeton Asset Management, in an interview with Bloomberg Television in Singapore today. “A bailout at this stage does not make sense to me.”

Feldstein wrote in an article published on the Project Syndicate website that the euro region and Greek bondholders will eventually have to accept that “the country is insolvent and cannot service its existing debt.””

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Silicon Valley Gears Up for Acquisitions as Economy Improves

Posted in Board Of Intellectual Capital, Economy, Gerbsman Partners, Intellectual capital, Investments, Market research, Strategy, Technology, Venture Capital, tagged , , , , , , , , , , , , , , , , , , , , , , , , , , , , , on April 12, 2010| Leave a Comment »

Here is some interresting news from Bloomberg.

“Silicon Valley companies looking to put their cash to work may drive a wave of mergers this year, bankers and venture capitalists say.

Companies are eager to make acquisitions because many of them have cut research budgets, says Robert Ackerman, founder and managing director of Allegis Capital in Palo Alto, California. That means they’re not as able to fall back on their own ingenuity to fuel growth. More businesses are relying on acquisitions to find their next new product or service, he says.

“The product cabinet is bare, but the market continues to move forward,” Ackerman said. “Wherever you see innovation sprint ahead, companies will have a product deficit, and will look to fill it.”

Google Inc., based in Mountain View, is currently one of California’s most acquisitive companies, buying at least five businesses in 2010. It agreed to buy Picnik Inc. last month, acquiring online photo-editing tools. Its purchase of DocVerse provided it with software that lets people share documents over the Internet. The value of the deals wasn’t disclosed.

The state’s largest single deal this year was Shiseido Co.’s purchase of San Francisco-based Bare Escentuals Inc. for about $1.7 billion.

California deal-making plummeted after 2007, when more than 2,670 transactions totaled almost $254 billion. So far this year, there have been about 530, worth $16.7 billion. That’s a higher number than in the first three months of 2009, although the value was greater in that year-ago period, at about $30 billion.

McAfee, Tibco

Local acquisition targets include Santa Clara’s McAfee Inc., Tibco Software Inc. in Palo Alto and Cupertino-based ArcSight Inc., according to Brent Thill, an analyst at UBS AG in San Francisco. McAfee and ArcSight both make programs that protect data, which could be more valuable as cyber threats mount. Tibco’s software helps programs of all kinds share information.

Goldman Sachs Group Inc. also cited San Francisco’s Salesforce.com Inc. and Palo Alto-based VMware Inc. as possibilities — though those companies aren’t the most likely targets, the firm says. Salesforce.com makes online customer- relationship software, while VMware sells so-called virtualization programs, which help computers run more than one operating system. Representatives from all the targets declined to comment or didn’t respond to messages.

Deal Volume

In Northern California, there were 45 deals involving venture-backed startups during the first three months of 2010, according to the National Venture Capital Association. That was the highest number in any quarter in at least five years.

More than 50 companies in California have at least $1 billion in cash and equivalents, which they could use for acquisitions. They’re led by a Bay area trio: San Francisco’s Wells Fargo & Co., with $68 billion; Cisco Systems Inc. in San Jose, with $39.6 billion; and Cupertino-based Apple Inc., with $24.8 billion, according to Bloomberg data.

“There’s a lot of cash on people’s balance sheets, so I think it’s a great time for startups,” said Kate Mitchell, managing director at Scale Venture Partners in Foster City, California. “They see that the faster, better, cheaper venture- backed companies are still growing, and they’re not spending on R&D, so they can be accretive.”

The value of deals in California topped out at $378.1 billion in 2000 during the Internet bubble, when there were more than 2,200 transactions. It took five years for the number of deals to surpass that earlier peak, and the dollar amount has never come close to recapturing the dot-com era’s glory.

Internet Bust

While the latest recession was the worst economic slump since the Great Depression, it actually wasn’t as devastating to California deal-making as the dot-com collapse. After having easy access to venture money and initial public offerings in the late-1990s and 2000, money dried up. The M&A industry hit bottom in 2002, when just 1,505 transactions accounted for $95.3 billion.

The deals crept back up over the next four years, peaking again in 2006 and early 2007. There were 665 in the first quarter of 2007, valued at $59.8 billion. That’s more than three times the number reported last quarter.

Tor Braham, head of technology mergers and acquisitions for Deutsche Bank AG in San Francisco, says mergers are ready to surge again for two reasons.

Pressure’s On?

“Private-equity funds have raised a lot of money before the financial crisis and there’s pressure on them to spend it before those commitments expire,” he said. Also: “Sellers want to get their deals done this year, before the expected increase in capital gains tax rate.”

Private-equity firms raised $538 billion in 2006 and $587 billion in 2007, just before the recession, according to the Private Equity Council in Washington. Capital-gains taxes, meanwhile, could rise above 20 percent for people earning more than $250,000 under budget proposals before Congress.

In the first quarter, Deutsche Bank advised Techwell Inc. in its $370 million takeover by Intersil Corp. The bank also worked with Nimsoft Inc. in its $350 million acquisition by CA Inc., and Francisco Partners on its sale of Numonyx BV to Micron Technology Inc. for about $1.3 billion.”

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Greylock Bats off Market Concerns, Calls Pandora an IPO Candidate

Posted in Board Of Intellectual Capital, Economy, Gerbsman Partners, Investments, IPO news, Market research, tagged , , , , , , , on April 7, 2010| Leave a Comment »

Here is some Techcrunch news.

“Last week we invited Greylock’s David Sze and Reid Hoffman into the studio for a chat about the state of the venture market, with its odd mix of soaring valuations and horrible returns. As it turned out, these two might be the worst guys in Silicon Valley to ask. I don’t say that because they refuse to pay up to be in good companies. (See Sze’s 2006 investment in Facebook—considered shocking at the time due to the company’s $500 million valuation, now considered one of the top trades in Web 2.0 history.) I say that because their portfolio doesn’t seem to be hurting.

We’ll be posting the full interview soon, but first here’s a sneak peak, including this bold statement from Sze about the funds the firm has been investing over the last five-to-seven years: “We think those will be our best funds ever.” Ever? That’s a claim I can’t imagine many Silicon Valley firms making—especially those that were in business during the late 1990s when nearly anything could go public.

Later in the video below, Sze noted that Greylock had three of the five potential blockbuster Web IPO candidates on most bankers’ and analysts’ short list: Facebook, LinkedIn and Pandora. As you can see in the video that last one caught Arrington by surprise and with good reason: A little more than a year ago Pandora was still on deathwatch. We knew it was profitable but, if it’s being bandied about as an IPO-hopeful, things may be even better than people realize. The good thing about being the only online music company to live long enough to go public is you don’t have a ton of competition.”

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Alliance to boost startups, hire more grads

Posted in Board Of Intellectual Capital, Business models, Economy, Investments, Market research, Strategy, Technology, Venture Capital, tagged , , , , , , , , on February 25, 2010| Leave a Comment »

Here is an article from SF Chronicle´s tech section worth reading.

“Intel Corp. and 24 venture capital firms will invest $3.5 billion in U.S. technology startups over the next two years, as part of a broad initiative to boost the nation’s competitiveness and create jobs.

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