Another San Jose Job Killer

There is indeed a “crisis of underemployment.” But Mr. Field does not understand the source of the crisis. Failing to diagnose it correctly, he offers a solution that will, in reality, make the problem worse. The negative effects of Mr. Field’s proposal include slower business growth, companies moving to neighboring towns, and, possibly, much higher costs. One benefit is likely to be a proliferation of new businesses (which, presumably, can hire all the part-time workers they want). Continue Reading →

Microsoft Continues Its Long History of Destroying Shareholder Value

For Microsoft, I recommend the same strategic advice Carl Icahn once gave to the Blockbuster board. Mr. Icahn realized that Blockbuster was in a dying market segment, soon to be displaced by streaming video. What the company did have was a large cash flow. Mr. Icahn wanted Blockbuster to begin a program of paying large dividends to stockholders. The board decided against this. And another large chunk of stockholder wealth went up in smoke. Microsoft would do well to consider a similar strategy. If Office isn’t a cash cow, then I’ve never seen one. And shut down mobile, online, and all the other divisions not paying their way. That means matching the Windows and Office segment returns on investment. Continue Reading →

Puerto Rico Got Away With It

These bonds are CUSIP 74514LE86. The bonds are Puerto Rico Commonwealth Series A maturing July 1, 2035. Take a deep breath. Those are 20 year bonds. The Commonwealth unloaded $3.5 billion of these with a hefty 8 percent coupon according to EMMA. But, as we all know, a bond is nothing more than a promise to make one or more future payments on specified dates. The quality of that promise is reflected in the yield to maturity, not the coupon yield. Continue Reading →