94 karma · joined June 14, 2010
That seems a bit disingenuous. PCs get better over time with software updates as well.
This is really bizarre. Hotfile might technically be right in suing Warner Bros. for pulling content they don't own the rights to, but it's not as if Hotfile had a legitimate claim to having those files on its servers. Those files are copyrighted by someone, and surely the real rights holders would want their intellectual property removed from Hotfile if they knew about it. And now that Hotfile admits knowledge of these files, aren't they compelled to remove them anyway?
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Perhaps I should have said ironic instead of bizarre. I don't disagree that there's a legal case here.
5. Google’s services need to support every platform
Google services need to support every platform eventually, but nothing stops them from releasing something working on a single platform first. As I recall, Google Chrome was available only for Windows when it was first released.
I think this article suffers from hindsight bias. No, Google is not going to come with with every successful app or web service in the industry, and no, not every product it releases is going to be wildly successful. But saying Google has an innovation problem because it can't build an app like Instagram is like saying Warren Buffet has an investing problem because he didn't buy stock in Apple right before the iPhone was released.
Google's process isn't geared to create novelty hits in the app store, and Buffet's method doesn't lead him to pick high flying tech stocks. But Google and Buffet are still doing fine.
The iPod touch, Apple TV, and iPad are all variously stripped, screenless, and scaled versions of the iPhone. They share the same processor and underlying OS. This allows Apple to not just sell a lot of stuff, but to sell a lot of the exact same stuff. So not only are their marginal costs lower from buying in bulk, their fixed costs of research and development are lower, too.
Could an iPad's cost $499 or an Apple TV $99 if they didn't sell the iPhone? Probably not, and definitely not if they wanted to keep the kind of margins they command right now.
Good managers see their responsibility as removing obstacles so that people can focus on one thing and really get it done.
Of course, there are lots of complications to this general rule in the real world. The US, at least, taxes the returns on your savings (capital gains and dividends) and gives you tax benefits for your debt. When saving in a 401k, employers often match your contribution, which amounts to a guaranteed 100% return on your investment for the portion that's matched.
Liquidity is also a concern. For example, if you have a 30-year mortgage on your house at 5%, you probably wouldn't want to put all of your savings into paying down that mortgage since you can't get it out again until you sell your house. If you have a sudden need to raise cash, you'd need to get a home equity loan, which can be tricky if your house value has plummeted or if interest rates are high.
Thus the full answer is that, well, it depends on a lot of life factors, and although paying off your debts is generally good advice, especially for very high interest loans like credit cards, there are many factors to consider other than the spread between the return on your savings and the interest rate on your debt.
The snowball strategy could be perfectly rational for people who gain more utility from the small but frequent accomplishments of paying off debt earlier than they do from maximizing their overall lifetime wealth.
It's not what I would do, but as they say, there's no accounting for taste.
If we look at MFE's peak earnings from FY2009, it's $173m. So a $7.7b price tag is just under 45x. In other words, it'll take 45 years of FY2009 earnings to merely regain the initial investment. Now let's be more generous and give Intel a low discount rate of 5% and assume that those earnings grow compounded 10% each year. It will still take 25 years for Intel to make back that investment.
Of course, the investment gets better if there are synergies that will provide additional boost to Intel's earnings, but what are they? I don't really buy (2) since Intel has shown that they are capable of getting their software onto your computer when they want to (see their integrated video drivers that download through Windows Update).
But even if they couldn't, they could have just continued collaborating with McAfee without buying them. That's essentially the exact same thing as what's happening now, minus the big transfer of wealth from Intel shareholders to McAfee shareholders.
I suppose that I'm just not convinced that Intel couldn't have rolled their own solution for less than $7bln. Even if they really needed to buy McAfee, a 60% premium over the market price is pretty steep, and it's hard for me to see how that adds more value to Intel shareholders than a 7% special dividend or buyback. So far, I haven't seen an argument that's made me think, "Oh yes, that IS something I'd pay $7 billion for."
Yes, it does say that the "McAfee purchase gives Intel an instant foothold on countless PCs," but these are not the PCs that Intel is after. These PCs already have Intel chips on them. Intel presumably wants security as a headlining feature for their next generation chips to entice users to upgrade.
In addition, Intel can gain an even wider-reaching foothold into your PC by bundling a driver and distributing it through Windows Updates, as it does already with its integrated video solutions. They presumably wouldn't need to pay Microsoft $7.7 billion for the priviledge of making Windows more secure.
Aside from the foothold in your PC, then, what is left of the "long-term, strategic buy"? There might be some patents and some talented developers, but for a company that already spends $5 billion on R&D every year, it's hard to understand why Intel couldn't come up with an in-house solution.
No, the real reason why Intel bought McAfee is probably much more pedestrian: Intel is simply sitting around with too much cash earning too little return.