Including: a cable-TV buyout, a Dell LBO, BP protests, Susan Shabangu speaks up for the mines, Yale sues some ungrateful students, Chinese income, Chinese smoking, and revenue-based financing might just be my new favourite thing.
Good morning
My my – but a LOT of interesting news has cropped up in the past 24 hours. Of course, it could just be that I’m finding more stuff interesting now that I’m older and more boring. But either way, there’ll be a slight format change.
The Big News Items:
- Liberty to acquire Virgin Media.
Link: stfu, Rupert Murdoch.
Summary: after talk of “a transaction” going on, it was announced yesterday that Liberty Global Inc. has agreed to buy UK cable-television provider Virgin Media Inc. for $16 billion. Liberty Global Inc. is the second-largest cable television provider in the world, after a company called Comcast Corp. This is also Liberty’s 8th deal in 12 months.
It’s interesting because: it should be news when news providers are in the news. Also, does anyone else think that cable television has peaked? It’s now dominated by a few key players. And it feels like that crunchtime moment when we’re all getting ready to livestream our programming choices off our iPads, Macbooks and Samsung Galaxy IIIs.
- Dell goes private.
Link: a leveraged buyout.
Summary: CEO Michael Dell and Silver Lake Management LLC are buying out Dell Inc. in “the largest leveraged buyout since the financial crisis”. They’re paying $24.4 billion to take the ownership out of the public’s hands.
It’s interesting because: the argument is that the investment will help to support “the long term success of the entire PC ecosystem” (according to Microsoft, who is lending $2 billion to Dell and co), and something about avoiding “the scrutiny of public investors”. Sounds a lot like they’re recognising the problem of short-term quarterly focus.
- BP objects.
Link: continuing oil spill woes.
Summary: the aggregate claims submitted to BP (from the individual states and local governments in the Gulf of Mexico) for the Macondo oil spill amount to $34 billion. BP is, like, woah. And declaring the figure “substantially overstated”.
It’s interesting because: some of the claims are in respect of “loss of tax revenue”. And given that BP had to hire some 40,000 people to clear the oil spill…
- South Africa has a mining indaba.
Link: Susan Shabangu does damage control.
Summary: Susan says that there will be no nationalisation of mines. And that any new mining legislation in SA must continue to keep South African mines competitive internationally.
It’s interesting because: it allows me to redefine nationalisation as “a process in which the people progress from being reliant on the market to being dependent on the government”.
- China’s income distribution plan.
Link: it’s a 35-point plan.
Summary: the government has described the task as “huge, complicated, and unable to be completed in a single step”. It involves increasing minimum wages, easing controls on borrowing and lending, and increasing spending.
It’s interesting because: we forget that China is
a countryan empire of 1.3 billion people. The Chinese government has accomplished the dramatic task of lifting 0.3 billion people out of poverty, but now it faces a growing income inequality gap between the 1 billion and the 0.3 billion. And however we might cut it, facing social discontent from one seventh of the population OF THE WORLD can kill your Party’s buzz. And sherbet – no wonder they’re calling the task huge and complicated. It’s the populational equivalent of “let’s fix Africa”.
The Softer articles:
- China’s smoking gun.
Link: well, just the “smoking” part.
Summary: tobacco and cigarettes in China are seen as a mark of social prestige. They are described as “a pervasive social currency”. And China has a population of some 320 million smokers (25% of their population; 5% of THE WORLD’S).
It’s interesting because: it makes you wonder how much of the Beijing smog is tobacco related. Oh, and also, the State has a virtual monopoly on tobacco production – so how can you ask the State to regulate it?
- Yale sues former students.
Link: alms mater.
Summary: Yale is suing former students for repayment of their student loans.
It’s interesting because: it’s Yale, the second richest college in America. But I agree with them – you can’t just let students not pay loans. If they want to go to Yale and study Ancient Greek instead of, say, plumbing – then they’d best have a plan to organise repayment. No one, and I mean no one, is “owed” an education in Ancient Greek because “the college is rich”.
- Baidu.
Link: yet another tech firm struggling to monetize.
Summary: Baidu’s last quarterly results showed disappointing revenues.
It’s interesting because: Baidu is also struggling to monetize a consumer base that is moving from lap tops to mobile phones. And it’s looking outside of China for new markets.
- Revenue based financing.
Link: so interesting.
Summary: you finance with debt, and pay interest; or you can finance with equity, and pay a portion of profits (dividends). But revenue-based financing is offering to pay a portion of sales. Which I find very interesting – because it means that you don’t pay interest in months where you don’t make sales.
It’s interesting because: it sounds like a great model for start-ups; and it’s a kind of debt-equity hybrid, because you’re above the profit line (like debt), but your benefit is directly linked to business success (like equity). And because it’s in-between, the effective rates are in the 18% to 30% range. If anyone is interested, you should inbox me. Would love to set up one of these.
That’s all for now.
Have a good day.
