With each new week, I worry just a little bit more that I'm boring my readers. After all, it seems like the same stuff surfaces each week in the news and, of course, I'm compelled to write about it. In a perverted way, I almost want to start my own hedge fund because it seems that the companies I've been writing about show up for a few weeks in a row and not for the right reasons.
Take, for example, Dell computer. Two weeks ago I told you about a lawsuit against them for knowingly selling computers with faulty parts in them. Ironically, the law firm defending them was a victim of the same crime with over 1,000 defective computers from the company.
This week, Dell is once again in the news but for other reasons. Apparently, it has been using subsidies paid to it by Intel to inflate its own earnings statements. In my personal opinion this should have never occurred but not because what it did was against the law. Instead, it is my opinion that the subsidies should have never been allowed in the first place, since Intel paid them to ensure that Dell never used computer chips from rival AMD in its products.
This violates the spirit of the Sherman Antitrust Act since doing this not only prevents fair competition but it encourages the premium that users pay for Intel chips. If AMD's market share increases then demand for Intel's products decreases resulting in a drop in price (according to supply / demand economics). Intel's actions, therefore, amount to an artificial inflation of the price, which is in essence fraud.
Regardless, Dell is paying the price (pun intended) for this by being assessed a $100mm fine for its actions.
If Dell was truly interested in making itself better, it would take a page out of the GM playbook. As you'll recall GM accepted bailout money from the U.S. Government in exchange for a second chance at staying solvent. This new lease on life gave it more time to establish itself in China, which now accounts for more unit sales than the U.S. market. The reasons are interesting, and I encourage you to read the article for which I have provided the link.
Since Facebook has been in my blogs a lot lately, here is my obligatory mention of the site. Firstly, Mark Zuckerberg is fighting a lawsuit where he apparently was hired to write Facebook according to a contract that the opposition has produced (with his signature on it), versus him writing the site after being inspired to do so. This has huge ramifications, profitability be damned, because if he loses a majority state in the company then he will essentially lose control over determining the path to profitability. Considering that this company's profits have a lesser chance of appearing than the release of Duke Nukem 3D under his leadership, this might not be a bad thing necessarily.
Finally, if you thought that the picture someone took of you in a pirate costume while blitzed at the party last weekend was funny, think again. I'm sure this isn't news to anyone, but considering that the web prevents anyone from forgetting anything, those embarrassing photos have become fodder for potential employers when they look for reasons to not consider your application for employment. And people laugh at conservative prudes like myself when I use discretion around people with cameras...
Take, for example, Dell computer. Two weeks ago I told you about a lawsuit against them for knowingly selling computers with faulty parts in them. Ironically, the law firm defending them was a victim of the same crime with over 1,000 defective computers from the company.
This week, Dell is once again in the news but for other reasons. Apparently, it has been using subsidies paid to it by Intel to inflate its own earnings statements. In my personal opinion this should have never occurred but not because what it did was against the law. Instead, it is my opinion that the subsidies should have never been allowed in the first place, since Intel paid them to ensure that Dell never used computer chips from rival AMD in its products.
This violates the spirit of the Sherman Antitrust Act since doing this not only prevents fair competition but it encourages the premium that users pay for Intel chips. If AMD's market share increases then demand for Intel's products decreases resulting in a drop in price (according to supply / demand economics). Intel's actions, therefore, amount to an artificial inflation of the price, which is in essence fraud.
Regardless, Dell is paying the price (pun intended) for this by being assessed a $100mm fine for its actions.
If Dell was truly interested in making itself better, it would take a page out of the GM playbook. As you'll recall GM accepted bailout money from the U.S. Government in exchange for a second chance at staying solvent. This new lease on life gave it more time to establish itself in China, which now accounts for more unit sales than the U.S. market. The reasons are interesting, and I encourage you to read the article for which I have provided the link.
Since Facebook has been in my blogs a lot lately, here is my obligatory mention of the site. Firstly, Mark Zuckerberg is fighting a lawsuit where he apparently was hired to write Facebook according to a contract that the opposition has produced (with his signature on it), versus him writing the site after being inspired to do so. This has huge ramifications, profitability be damned, because if he loses a majority state in the company then he will essentially lose control over determining the path to profitability. Considering that this company's profits have a lesser chance of appearing than the release of Duke Nukem 3D under his leadership, this might not be a bad thing necessarily.
Finally, if you thought that the picture someone took of you in a pirate costume while blitzed at the party last weekend was funny, think again. I'm sure this isn't news to anyone, but considering that the web prevents anyone from forgetting anything, those embarrassing photos have become fodder for potential employers when they look for reasons to not consider your application for employment. And people laugh at conservative prudes like myself when I use discretion around people with cameras...