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Health & Healing

Healthnotes

Wednesday, May 29, 2002

NYT. Intel cuts prices of its chips by up to 53%. In response, analysts cut earnings estimates by 7%. This is an example of the New Economy at work. Intel, through the application of new manufacturing technology, has radically boosted productivity. As a result, it has opted to pass on to customer these cost savings rather than using the savings to boost short term earnings. Why? Intel is paranoid New Economy company. It knows that pricing power is in the hands of customers and competitive advantages are fleeting. Information travels too fast now. Intel's paranoia is now the standard for the rest of corporate America. It has opted for lower sustainable earnings over short term stock growth that keeps investors happy.

Key here is sustainable. The demand-price curve Intel understand drives increased purchases. For example, we'd buy my wife a laptop if I could get what I want under $1000. It's currently a little over $2000. While Intel doesn't control the WHOLE package cost, for every increase in capability and drop in price, you capture more families with additional purchases. Just like I have a 2Mpix digital camera I spent $800 for. I'll but a 4Mpix camera for under $350. They are not there yet.

An underlying flaw in financial theory is that corporations operate as efficient vehicles for capital. The theory implies that companies will return earnings to investors if it doesn't have investment opportunities that provide a return greater than those available to its investors. Corporations aren't efficient financial vehicles. They have a will to survive. [John Robb's Radio Weblog]

Jon really hits the mark here. Corporations enbody the personalities of those with decision making authority. While the Board of Directors is supposed to drive the company overall, in observation the individuals involved in executive management are desperate to keep their "baby from dying" (although sometimes it appears the baby's sole purpose in life is to be sucked dry by self same executives). I agree with Warren Buffett that stock options do not align executives with investors. Cash investment aligns executives with investors. Significant, ongoing cash investment.

11:51:03 AM

I left Montreal heading toward Quebec city, when I decided to stop at a comfort station. The first stall was occupied, so I went into the second one. I was no sooner seated than I heard a voice from the next stall: "Hi, how are you doing?"

Well, I am not the type to chat with strangers in highway comfort stations, and I really don't know quite what possessed me, but anyway, I answered, a little embarrassed: "Not bad."

And the stranger said: "And, what are you up to?" Talk about your dumb questions! I was really beginning to think this was too weird! So I said: "Well, just like you I'm driving east."

Then, I heard the stranger, all upset, say, "Look, I'll call you back, there's some idiot in the next stall answering all the questions I am asking you."

11:42:33 AM

Ginseng berry helps fight obesity, diabetes. If new work in mice can be duplicated in people, researchers predict studies of the ginseng berry may lead to novel drugs that deflate spare tires and ward off diabetes.

11:39:01 AM

Slacktivism. "The desire people have to do something good without getting out of their chair."

6:47:21 AM

Po Bronson. "As I get older, I've learned to listen to people rather than accuse them of things."

6:42:24 AM

Thomas A. Edison. "We don't know a millionth of one percent about anything."

6:41:43 AM

George Bernard Shaw. "A government that robs Peter to pay Paul can always depend upon the support of Paul."

6:41:22 AM