Looking at M&A Aftermath

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paolo.franzoi 12/5/2012 | 3:13:09 AM

re: Looking at M&A Aftermath
We have not been alone in high tech for a couple of decades at least. There is this country called Japan which does some high tech. Also, take a look at Western Europe. There are some high tech companies there.

Jobs ebb and flow. Technologies ebb and flow. If you stay static, you have a great likelihood of being part of an ebb. The seventies saw the shut down of the Apollo Program and massive cuts in Aerospace. Then, there was the Capital Products crash in the early 80s. There was end of the Cold War and cutback on Defense in the 90s. Each one of these waves occurred. People thought all the jobs were going to Japan at one time. But they didn't.

The telecom carrier and equipment businesses are going through a massive structural change. To expect static behavior seems irrational.

Lots of jobs will be outsourced. Engineering salaries increased in the bubble. Now either productivity must catch up to the increase or these jobs will be sent to places where the salaries didn't get inflated.

seven

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startup_shutup 12/5/2012 | 3:13:08 AM

re: Looking at M&A Aftermath >> Startup, if you don't mind, you seem fixated on startup companies and houses.

Bay Area Startups and Bay Area real estate -- BOTH ARE SCAMS (mostly form economic efficiency sense) ...... that is why I discuss them

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rjmcmahon 12/5/2012 | 3:13:08 AM

re: Looking at M&A Aftermath What I do not understand is how do you justify residential real estate prices in Bay Area and other places.

Many people see the large differences in rental rates vs mortgage payments as an indicator of a housing bubble. The American dream of owning can lead to emotional choices which are not based on sound economics. These emotional (and speculative) forces are real forces so they can't be ignored. What we do with them is our choice.

Dean Baker of the Center for Economic Policy and Research who predicted the 2000 stock bubble recently sold his condo in Washington DC. He is now renting. http://www.cepr.net

Startup, if you don't mind, you seem fixated on startup companies and houses. My guess is that at one time you believed a startup would be an avenue to affording your own home in the Bay Area and that didn't work out. I don't know how to help with that. Sometimes we have to let go of dreams for awhile, refocus our emotions and energy on what *is* realistic and possible, if we are going to progress towards the things that may seem impossible.

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startup_shutup 12/5/2012 | 3:13:08 AM

re: Looking at M&A Aftermath Indentured labor (for Bay Area companies) comes as follows:

How can people afford to live where housing is so expensive? One of the ways of coping with high housing costs is with GÇ£creativeGÇ¥GÇôand riskyGÇôfinancing. Roughly two-thirds of the home mortgages in the San Francisco Bay area are interest-only mortgages. Theoretically, you could make mortgage payments forever without acquiring a cent of equity in your home. You would essentially be renting with an option to buy, should your income ever reach the level where you could afford to pay something extra toward the principal.
In reality, the interest-only mortgage payments apply for only a limited number of yearsGÇôthree to five years in most casesGÇôafter which the payments rise, so as to contribute something toward the payment of the principal. People who expect their incomes to rise significantly in a few years assume that they will be able to handle the higher payments then. Of course that assumption can turn out to be wrong and the house can be lost.

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desiEngineer 12/5/2012 | 3:13:08 AM

re: Looking at M&A Aftermath Brook7: "I think speculating about all of this is interesting but I could say that we have a glut from the last 5 - 8 years of CS majors. We are going through a down cycle. The trend is clearly bottoming out."

Methinks thou doth protest too much :-)

It would be comforting to think that the bubble caused the glut (as it did other gluts), and the painful catharsis is just what the doctor ordered.

It is prudent to admit that there is a possibility that some of the decline in CS undergraduates is because CS is not offering the same promise it once did, and to figure out what to do to make it more attractive.

The rise in PhDs is also a little disturbing - are they master's degree students who couldn't find jobs?

Or has CS just matured to the point where we don't see phenomenal growth in enrollment just like mechanical engineering or any other field?

I'd like to think this was true, but I'd prefer to hedge and see if a slightly more preferential or slightly less laissez-faire government policy is called for.

I guess the US offers me more than what I would get back home, and I don't particularly care that my job may be moving back there. I am pretty sure that I speak for many Indians who are happy that India is getting more dominant - and hopefully, more discerning - in the software business. To say so sounds like you are dissing your country of origin, but I don't see the many happy ex-pat Indians moving back. There is some nervousness there.

-desi

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dwdm2 12/5/2012 | 3:13:07 AM

re: Looking at M&A Aftermath "So the CEO function will be outsourced by default.

So sweet..so sweet -- when this would be reality?"

I know many will not like my perspective... but here is my two cents any way:

If you outsource the CEO position what's next? The Pres? BTW, s_s, what happens when its your turn to become the next CxO and you find that the position is already outsouced to an overseas guy who's running the show and you must report to that guy ;-) ? Just a thought...

Cheers

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dljvjbsl 12/5/2012 | 3:13:07 AM

re: Looking at M&A Aftermath
One of the false assumptions made is that we can outsource the lower level engineering/programming jobs overseas, but keep the high level design jobs that require experience here. That works in the short term. However, where will the experienced engineers come from 10=15 years from now? THey will be the people doing the low level jobs today.

And many of the jobs being outsourced are working on products that will be sold in China, India and other emerging markets.

When these junior peopled become experoienced who else will be in a better position to understand the markets and the technology and products needed to fill those markets. One possibility is that native Indian, Chinese, ... firms will arise to fill those markets. Another possibility (and probably the more likley one) will be that the center of gravity of existing firms will shift towards their markets.

Management will come from those areas who best understand the company's market. So the CEO function will be outsourced by default.

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dwdm2 12/5/2012 | 3:13:07 AM

re: Looking at M&A Aftermath "... at one time you believed a startup would be an avenue to affording your own home in the Bay Area and that didn't work out."

Nothing specific to rjmcmahon or startup_shutup, however, the above sentence has a bigger implication. While in fact about 80% strtups die in their infancy, it is the rest 20% among which come out the next MS, HP, CSCO, etc. Obviously, 80% constitutes a big crowd, and a lot of rubble are in fact true about them. However, OTH, they help to build the culture of startups... if it was not for them, the good 20% of the startups that we are proud of, would be hard to come by. IOW, MS didn't know that they were going to be the MS as we know today until they went through the pain of startup phase. They survived and succeeded and we praise them. However, the 80% that go through the same pain and then die, for various reasons, some their own fault and some fall victim of the circumstances (e.g., the VC needs to free up their cash, etc.), they at least deserve the credit of taking a stand... Think about it, if indeed a startup found an avenue to own his own realestate by means of his startup, wouldn't you call it a success?

Cheers.

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startup_shutup 12/5/2012 | 3:13:07 AM

re: Looking at M&A Aftermath >> So the CEO function will be outsourced by default.

So sweet..so sweet -- when this would be reality?

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startup_shutup 12/5/2012 | 3:13:06 AM

re: Looking at M&A Aftermath >> BTW, s_s, what happens when its your turn to become the next CxO and you find that the position is already outsouced to an overseas guy who's running the show and you must report to that guy

Look I am not interested in hypothetical talks ... I just want this to become reality in large scale. I am tried of lying schumuks also called silicom valley CXOs. They are not adding any value (CONFUSION vs INNOVATION)......

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