Finance Matters

Archive for January 9th, 2010

Thank you, Tim Geithner!  Thank you, Ben Bernanke!  Thank you, Hank Paulson!  Thank you, Larry Summers!  Thank you, Barack Obama!

Thank you, AMERICA, for making this yet another absolutely great year to work on Wall Street!

[Wall Street] executives acknowledge that the [bonus] numbers being tossed around — six-, seven- and even eight-figure sums for some chief executives and top producers — will probably stun the many Americans still hurting from the financial collapse and ensuing Great Recession.

Goldman Sachs is expected to pay its employees an average of about $595,000 apiece for 2009, one of the most profitable years in its 141-year history. Workers in the investment bank of JPMorgan Chase stand to collect about $463,000 on average…

(Kudos to Citi’s Vikram Pandit, though, who’s forgoing a bonus and taking a salary of $1).

Louise Story, NYT: 7 Or 8 Figures For the Top Bonuses On Wall Street

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See Also:

• Goldman’s Response To UK Bonus Tax: Just Pay Its Employees A Lot More
• Goldman’s $22 Billion Bonus Bonanza
• Goldman Desperate To Avoid PR Disaster Come Bonus Season

We’ve been following the special election in Massachusetts, where the GOP hopes to pull a surprise upset in the race to fill Ted Kennedy’s seat.

If they do pull it off, healthcare reform is instantly in trouble, as the Democrats drop below 60.

But money is coming to the rescue of Democrat Martha Coakley — healthcare industry lobbyist money, specifically.

Tim Carney identifies several of her top fundraisers. Take a look at who they represent:

• Thomas Boggs, Patton Boggs: Bristol-Myers Squibb
• Chuck Brain, Capitol Hill Strategies: Amgen, BIO, Merck, PhRMA
• Susan Brophy, Glover Park Group: Blue Cross, Pfizer
• Steven Champlin, Duberstein Group: AHIP, Novartis, Sanofi-Aventis
• Licy Do Canto, Raben Group: Amgen
• Gerald Cassidy, Cassidy & Associates: U. Mass Memorial Health Care
• David Castagnetti, Mehlman, Vogel, Castagnetti: Abbot Labs, AHIP, Astra-Zenaca, General Electric, Humana, Merck, PhRMA.
• Steven Elmendorf, Elmendorf Strategies: Medicines Company, PhRMA, United Health
• Shannon Finley, Capitol Counsel: Amgen, Astra-Zeneca, Blue Cross, GE, PhRMA, Sanofi-Aventis.
• Heather Podesta, Heather Podesta & Partners: Cigna, Eli Lilly, HealthSouth
• Tony Podesta, Podesta Group: Amgen, GE, Merck, Novartis.
• Robert Raben, Raben Group: Amgen, GE.

Of course, this is how politics works. Lobbyists for various corporations and causes get involved wherever they can for candidates of both parties. But when you see all these big pharma (and insurance!) representatives coming with cash for a crucial vote, you know which side they’re on.

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See Also:

• Upset In Massachusetts Special Senate Race May Be The Political Earthquake Of 2010
• New Poll Shows Healthcare-Killing Upset Potential In Massachusetts Senate Race
• The Media’s Favorite Healthcare Analyst Revealed To Be On Obama’s Dole

Cox Communications has reached a deal to carry Epix, the premium movie channel started by Viacom last year, according to a source familiar with the matter.

David Grabert, a spokesman for Cox, confirms this, but says Cox is “giving no further details at this time.”

This is a much needed deal for Viacom’s fledgling movie channel. Epix is only available to Verizon FiOs’s 2.7 million subscribers now. Cox is the nation’s third largest cable provider with 6 million subscribers.

Epix is a joint venture between Viacom, Paramount, Lions Gate and MGM. It also allows subscribers to stream thousands of movies from its site.

Epix is a money losing venture. In a November note, Pali analyst Rich Greenfield wrote “we believe EPIX is well below the revenue goal it needs to pay for the cost of the movies it is buying from its three studio partners.”

Epix chief Mark Greenberg told the Wall Street Journal he expects the company to break even by 2011.

Our source didn’t know the terms of the Cox deal.

News of a potential deal between the two companies was first reported by Bloomberg in December.

Bloomberg’s report quotes Piper analyst, James Marsh who said more than 1,000 FiOs subscribers per day signed up for Epix in its first month. The channel costs $9.99 per month on FiOs.

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See Also:

• Could New ‘Epix’ Network Mean More Streaming Movies For Netflix? (NFLX)
• Time Warner Cable In Talks To Carry ESPN 3D Channels
• Time Warner Celebrates FOX Deal By Jacking Up Cable Prices Again

I’ve seen a number of situations recently where entrepreneurs decided to shut their startups down while they still had cash in the bank. (Contrary to popular mythology, I’ve never seen a case where investors forced an early-stage startup to shut down before they ran out of cash — it has always been voluntary).  

Shutting down is an incredibly hard thing to do.  It takes great maturity and intellectual honesty to realize things aren’t going the way you hoped and that it might be better to just close shop and do something else.

How entrepreneurs handle shutting down is very important.  

First, try to return as much capital to your investors as you can (after paying off employees and other important debts – but don’t waste money on an expensive legal process). Second, if you’ve developed IP, spend a few months trying to sell it to recover as much capital as you can (often investors will offer a “carve out” to incentivize entrepreneurs since the likely return to investors will be under total number of preferences).  Don’t go off starting a new venture before you’ve properly closed down your current one (I’ve seen this twice recently – very bad form).  Finally, for your own learning as well as your reputation, write a detailed post-mortem about what went right and wrong and send it to your investors, and then try to follow up with in-person discussions.

Here’s the good news.  One of the great things about angel and venture investors is that failure is accepted, as long as you do it in the right way. Venture investors will often fund entrepreneurs who’ve lost their money in the past. They understand that if you build an interesting product and, say, market forces turn dramatically against you, that’s a risk they took — and the type of risk they will take a again. Also, entrepreneurs tend to be judged by their wins (max() function), not their average.  You’d be surprised how many entrepreneurs have failures in their past that no one remembers once they have some success.

Read more posts on Chris Dixon »

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• 3D TV Is Dead On Arrival

The war on terror is back, though the story has moved from Afghanistan (which is ostensibly now in nation-building mode) to Yemen, which up until recently, many Americans probably had never heard of.

Asia Times has an excellent overview of the situation written by former Indian ambassador M K Bhadrakumar. What’s most interesting is his analysis of Yemen through the lens of the broader tension between the US and China.

Most important, however, for US global strategies will be the massive gain of control of the port of Aden in Yemen. Britain can vouchsafe that Aden is the gateway to Asia. Control of Aden and the Malacca Strait will put the US in an unassailable position in the “great game” of the Indian Ocean. The sea lanes of the Indian Ocean are literally the jugular veins of China’s economy. By controlling them, Washington sends a strong message to Beijing that any notions by the latter that the US is a declining power in Asia would be nothing more than an extravagant indulgence in fantasy.

In the Indian Ocean region, China is increasingly coming under pressure. India is a natural ally of the US in the Indian Ocean region. Both disfavor any significant Chinese naval presence. India is mediating a rapprochement between Washington and Colombo that would help roll back Chinese influence in Sri Lanka. The US has taken a u-turn in its Myanmar policy and is engaging the regime there with the primary intent of eroding China’s influence with the military rulers. The Chinese strategy aimed at strengthening influence in Sri Lanka and Myanmar so as to open a new transportation route towards the Middle East, the Persian Gulf and Africa, where it has begun contesting traditional Western economic dominance.

China is keen to whittle down its dependence on the Malacca Strait for its commerce with Europe and West Asia. The US, on the contrary, is determined that China remains vulnerable to the choke point between Indonesia and Malaysia.

An engrossing struggle is breaking out. The US is unhappy with China’s efforts to reach the warm waters of the Persian Gulf through the Central Asian region and Pakistan. Slowly but steadily, Washington is tightening the noose around the neck of the Pakistani elites – civilian and military – and forcing them to make a strategic choice between the US and China. This will put those elites in an unenviable dilemma. Like their Indian counterparts, they are inherently “pro-Western” (even when they are “anti-American”) and if the Chinese connection is important for Islamabad, that is primarily because it balances perceived Indian hegemony.

Read the whole story at Asia Times — >

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See Also:

• US Opens Third Front Of War: Yemen
• China Stunned As Japan Makes Shock Island Announcement In Key Economic Zone
• Terror And The Law: 10 Must-Read Books