Monthly Archives: April 2010

Taibbi on the SEC charges against Goldman

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Matt Taibbi is back with a piece in The Smirking Chimp. This time he is writing about the underlying attitude at Goldman.

Even if he stands to make a buck at it, even your average used-car salesman won’t sell some working father a car with wobbly brakes, then buy life insurance policies on that customer and his kids. But this is done almost as a matter of routine in the financial services industry, where the attitude after the inevitable pileup would be that that family was dumb for getting into the car in the first place. Caveat emptor, dude!

Goldman investigated by Justice Department

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The Wall Street Journal is reporting (subscription required) that the US Justice Department has opened a criminal investigation of Goldman Sachs. It is apparently focuses on whether Goldman committed fraud in connection with mortgage trading and is a result of a referral from the SEC.

This is very big and could spell disaster for Goldman, regardless of whether a formal criminal charge is made. And an actual indictment alone could so cripple Goldman’s business that it could fail.

More from the Washington Post.

The latest Microsoft vaporware (updated x2)

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Vaporware is the tech name for products that are announced well in advance of when they actually ship (and sometimes they never actually exist). Microsoft has a long history of announcing vaporware. Announcing vaporware is intended to scare off the competition.

How cool does this Microsoft table computer, called Courier, look to you? Keep in mind it was leaked by Microsoft as talk of an Apple tablet took hold.

How does the story end? Well, we all know that Apple shipped its iPad. Now, Microsoft today essentially confirmed Courier was nothing but vaporware. But guess which publisher bit the bait when Microsoft first leaked the “product.” Why Gizmodo, of course.

Update: In what may be another case of vaporware, HP has announced it will not build a Windows 7-based tablet that Steve Balmer of Microsoft promoted earlier this year.

Update 2: With the demise of two (potential) tablet computers, I think one might conclude that the iPad is already wiping out the competition, or at least forcing a major reevaluation of the skill it takes to make a table that can be successful in the marketplace.

Apple acquires Siri

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Apple has acquired Siri. The company makes an eponymous free iPhone application that, in its current form, is very cool.  When Apple adds its “magic sauce” of software interface magic, it could well be much, much better.

Here is a video showing the current Siri software:

Now take a look at this old Apple concept video and imagine that they try to move Siri in this direction:

Gizmodo: choppy waters ahead

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Gizmodo may really be facing a serious situation with respect to the iPhone brouhaha. To wit: the police have raided the home of their reporter, Brian Chen, as part of their investigation into whether a crime occurred, according to Dan Frommer, writing for Business Insider.

Police raided Gizmodo editor Jason Chen’s home in Fremont, Calif. last week, seizing computers and other gadgets, as detectives probe how the gadget blog editor obtained an Apple iPhone prototype, which he first published photos and videos of last Monday.

According to documents viewed by Business Insider, law enforcement agents sent by the San Mateo County Sheriff’s Office seized several computers, including three Apple laptops, two Dells, an IBM notebook, and an HP server. Cops also took external hard drives, digital cameras, cellphones, USB drives, an iPad, and documents.

Fake Steve Jobs offers his take:

Gawker’s COO says the warrant was not valid because in California you can’t bust into the house of a reporter and take his stuff. Well, excuse me, but as far as I can tell, that just happened. And do you know why it happened? Because this is my state, Gawker. I make the rules.
My take is that reporters can relay any information they have. However, when they pay money for property clearly belonging to someone else, they are subject to prosecution just like anyone who happens to buy tangible property from someone who patently is not a legitimate owner.  To twist a legal concept to make a point: Gizmodo was in no fashion a holder in due course of the unreleased 4th generation iPhone.

Ben Stein on Goldman Sachs

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I always loved reading Ben Stein’s column in the New York Times. Unfortunately, he was dropped by the Times a couple of years ago.

Fortunately, he continues to write, now for Bloomberg. Check out his take on the Goldman fraud case.

If Goldman can make money by creating a scam synthetic security, as the SEC’s complaint alleges, and then make more money by co-operating with short sellers to demolish that security and consequently attack the industry around it — in this case, housing — is there anything Goldman can’t do? Is there no limit to how anti-social and unpatriotic traders and underwriters can be? Or is it all about making the quick and immense buck? That is, in a world in which young Americans are fighting terrorists in Iraq and Afghanistan, is there any limit to what financiers here at home can do? And if there aren’t adequate limits, why don’t we have them, and soon?

Also worth a look is Stein’s piece on CBS Sunday Morning yesterday.


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Apple will surpass Microsoft

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It is increasingly clear that Apple will indeed ultimately surpass Microsoft in market cap. Perhaps not this year, but very soon. Why? As Robert X. Cringely notes, Microsoft’s cash comes from milking Office and Windows. Both are fully matured, broadly used products. But new product growth is in mobile and media, neither of which Microsoft has been able to tap successfully.  Apple also has a huge opportunity to capitalize on its growing computer share and its operating system OS X, which consumers love.

What’s really significant here is that the computer industry is undergoing a transition to web services and mobile hardware, neither of which are dominated by Microsoft.  Yet in each Apple holds a leadership role.  So while Microsoft can continue to live off Windows and Office fat for years to come, absent some very dynamic product initiatives, the long term trend for Redmond is far from good.

The trend line is definitely up for Apple and mildly down for Microsoft. It took 13 years to do it, but Apple is well positioned now to take Microsoft’s crown. I mean it. Look at the downward price erosion of Microsoft Office caused by a combination of Open Office and iWork, which is down to $30 on the iPad. How long will it be until Apple is giving iWork away to sell hardware — an option Microsoft doesn’t have? Not long. By then a bit more of Redmond’s goose will have been cooked. Digital market leadership is now Apple’s — not Microsoft’s — to lose.

Disclosure: I am long in Apple stock. Nothing on this blog should be construed as investment advice.

Greed quote of the day

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Of course we didn’t dodge the mortgage mess. We lost money, then made more than we lost because of shorts.

– Goldman Sachs CEO Lloyd C. Blankfein, from a November, 2007, email, quoted in the New York Times.

One of their defenses to the current SEC charges is that they lost money on mortgage investments, at least in one case.  Clearly, their massive short positions, credit default swaps related to mortgages, some which were insured by AIG and ultimately paid in full by taxpayers, made Goldman billions. From the same New York Times article:

Goldman also released detailed financial statements for its mortgage trading unit. Those statements showed that a group of traders in what was known as the structured products group made a profit of $3.69 billion as of Oct. 26, 2007, which more than covered losses in other parts of Goldman’s mortgage unit.