Google to become an investment bank?

From Good Morning Silicon Valley

Poor Google — you and I should have such problems. The search sovereign has amassed so much cash that it is in danger of possible reclassification and regulation as an investment firm. In its most recent quarterly financials, Google listed assets totaling $14.4 billion, including $4 billion in cash and $5.8 billion in marketable securities. Under guidelines set by the Investment Company Act of 1940, companies with more than 40 percent of their assets in securities are to be regulated as a mutual fund. Google clearly falls into that category at the moment, so it asked the Securities and Exchange Commission late last month for an exemption. “Google states that it is not in the business of investing, reinvesting, or trading in securities,” the company told the SEC, adding it has no plans to invest “for short-term speculative purposes.” The SEC hasn’t yet responded to the request, but most Wall Street types I spoke with feel approval is likely. “They will probably get the SEC exemption — but if they didn’t, its fascinating to think of what the boys could do with that $10 billion in cash (and securities),” said Barry Ritholtz, chief market strategist for Ritholtz Research. “I strongly doubt we will see a big buyback or a special dividend from them. And there’s only so many jumbo jets anyone really needs. So that makes a major acquisition the next option. Hell, they could buy Tivo, XMSR, half of Amazon.com — and still have a few billion dollars left.”

The Economist and the dim future of newspapers

Hmmm… The Economist has an oddly unsatisfactory article on the dim future of newspapers. “Newspapers”, it concludes, “are making progress with the internet, but most are still too timid, defensive or high-minded”. The associated Editorial is more succinct:

Newspapers have not yet started to shut down in large numbers, but it is only a matter of time. Over the next few decades half the rich world’s general papers may fold. Jobs are already disappearing. According to the Newspaper Association of America, the number of people employed in the industry fell by 18% between 1990 and 2004. Tumbling shares of listed newspaper firms have prompted fury from investors. In 2005 a group of shareholders in Knight Ridder, the owner of several big American dailies, got the firm to sell its papers and thus end a 114-year history. This year Morgan Stanley, an investment bank, attacked the New York Times Company, the most august journalistic institution of all, because its share price had fallen by nearly half in four years.

Having ignored reality for years, newspapers are at last doing something. In order to cut costs, they are already spending less on journalism. Many are also trying to attract younger readers by shifting the mix of their stories towards entertainment, lifestyle and subjects that may seem more relevant to people’s daily lives than international affairs and politics are. They are trying to create new businesses on- and offline. And they are investing in free daily papers, which do not use up any of their meagre editorial resources on uncovering political corruption or corporate fraud. So far, this fit of activity looks unlikely to save many of them. Even if it does, it bodes ill for the public role of the Fourth Estate.

Four years on

It’s four years today since my lovely Sue died. This is one of my favourite photographs of her. She’s feigning astonishment at one of Tom’s tall stories, narrated with the all the wonderful exuberance of a four year old. It was taken in a restaurant after a happy Sunday morning spent browsing through the market at Camden Lock in London, until I had put my foot down and loudly demanded lunch.

A few weeks ago, sitting on a beach in Donegal while the kids fooled about in the waves, I fell into conversation with a woman who was also watching her children, similarly engaged. “So”, she said, after a time, “you have sole custody of the children?” — and was mortified when I explained that their mother had died. The poor woman felt that she had committed an unforgivable gaffe and it took a while to reassure her that it was ok.

Brooding on the exchange afterwards, it occurred to me that, in a way, she had hit the nail on the head. The thing that most agonised Sue about dying was that she was leaving her children. She felt that she was failing them, letting them down, abandoning them. The only way I could comfort her was by promising her that, for as long as they needed me, nothing would come between me and them.

It was the most solemn promise I’ve ever made and, as I unearthed the towels that they had forgotten (and I had remembered) to pack for the beach, I persuaded myself that I’m doing my best to honour it. But I also started thinking about the etymology of ‘custody’. In law, it has negative (“detention: a state of being confined”) as well as positive connotations. I like the US legal system’s definition: “the right to or responsibility for a child’s care and control, carrying with it the duty of providing food, shelter, medical care, education and discipline”. In that sense, the woman on the beach was right. I’m not sure about the discipline, but I can tick all the other boxes on that list.

One unambiguously positive thing about the last four years is that the children have always been able to talk openly about their mother — something I attribute in part to the fact that they explicitly gave her their permission to die. In the car on the way back from visiting their grandparents last Sunday, they told me about how they make decisions as to whether to explain to new friends why they have only one parent. It transpires that they operate a “need to know” principle; only good friends need to know; everyone else is left to infer that, somehow, their dad made a mess of his marriage!

In his thoughtful little book, A Grief Observed, C.S. Lewis says somewhere that you never stop being married to a spouse who has died. What I’ve learned from the last four years is that he was right.

One born every minute

This morning’s Observer column — on the profitability of spam.

So who were the schmucks buying this stuff? It seems that among those who responded to Amazing’s spam – under the subject line, ‘Make your penis HUGE’ – was the manager of a $6bn mutual fund, who ordered two bottles of Pinacle to be shipped to his Park Avenue office in New York. A restaurateur in Boulder, Colorado requested four bottles. The president of a California firm that sells aeroplane parts and is active in the local Rotary Club gave out his American Express card number to pay for six bottles. And so on.

So pharmaceutical spamming is profitable. What then of the ‘pump and dump’ variety? A new study by Jonathan Zittrain of the Oxford Internet Institute and Laura Frieder of Purdue University in Indiana provides persuasive evidence that it, too, is profitable – though probably less so than penis-enlargement spams…