Gongol.com Archives: February 2013
Brian Gongol

February 5, 2013

Computers and the Internet Dell Computers goes private for $24 billion
It's reported as the "biggest leveraged buyout" since Hilton went private in 2007. Is it worth $24 billion? Hard to tell. Profits over the last four years have averaged about $2.5 billion a year, so by that measure, ten times earnings would be $25 billion. In some worlds, ten times earnings would be a decent price -- not an incredible bargain, but a fair price. But in the computer sector, who has any clue whether those profits will continue ten years into the future? There's far less clarity in computer-making than in, say, utilities. So even though it's probably a fair price based on normal metrics for companies in low-volatility industries, it's a bit of a gamble in the technology sector.

Science and Technology Lights out -- not just in New Orleans
The power outage at the Super Bowl was embarrassing, but the Iowa Association of Municipal Utilities warns that we could have rolling blackouts in a couple of years because new environmental rules are shutting down power plants faster than replacements can be built -- and those replacements that are being built use natural gas, which could become very expensive very quickly.

Business and Finance Someone at the CBO needs to re-adjust their glasses
Their reading of the economic crystal ball has been off -- way off -- for several years in a row. They're estimating much faster economic growth than we've been having. And we definitely need faster economic growth -- but wishing doesn't make it so, and when our Federal government makes decisions based upon faulty projections, something's bound to go badly.

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