New York Times (November 18)
UBS expects “the global A.I. capex tally” will “hit $423 billion this year…and reach $1.3 trillion by 2030.” But Big Tech’s “debt-fueled spending spree” is raising concern. “Not long ago, huge investment pledges pushed the A.I. rally to new heights. But the need to borrow so many billions is beginning to rattle stock and bond investors.” For example, “shares in Oracle, and some of if its bonds, have sold off sharply in the past month in a sign of investors’ growing concerns about its long-term A.I. financing plan.”
Tags: $1.3 trillion, $423 billion, 2030, A.I., Big tech, Bond, Borrow, CAPEX, Debt-fueled, Financing, Investors, Oracle, Shares, Spending spree, Stock, UBS
The Economist (July 31)
“America’s biggest technology companies are combining Silicon Valley returns with Ruhr Valley balance-sheets. Investors who bought shares in Alphabet, Meta and Microsoft a decade ago are sitting on eight times their money, excluding dividends.” Their hard assets multiplied with data center investment and their property, plant and equipment is now “worth more than 60% of their equity book value, up from 20%” a decade ago. Even more eye popping, combined with Amazon and Oracle, their capex spending is estimated to account “for a third of America’s economic growth during the most recent quarter.”
Tags: Alphabet, Amazon, Balance sheets, Book value, CAPEX, Data centers, Dividends, Eye-popping, Hard assets, Investors, Meta, Microsoft, Oracle, Returns, Shares, Silicon Valley, U.S.
Barron’s (June 23 Issue)
“Non-GAAP numbers were to be used judiciously to explain extenuating or extraordinary circumstances, like a factory fire or the sale of a division.” Instead, they’ve become endemic. “For fiscal 2024, some 351 companies in the S&P 500 index, or 71%, reported either non-GAAP net income or non-GAAP earnings per share.” Of those, 89% of the adjustments made “their results look better” and the difference can be vast. “Intel had the biggest adjustment last year.” With “a GAAP loss of $19.2 billion” the chipmaker “categorized $18.6 billion as nonrecurring, so it reported a non-GAAP loss of $600 million.” And the sleight of hand can be performed year after year. For example, Oracle “has booked a restructuring charge every year for the past five years.” Especially in tech and healthcare, “non-GAAP numbers are now more accepted than the ‘generally accepted’ ones.”
Tags: Adjustments, Endemic, EPS, Extenuating, Extraordinary circumstances, Factory fire, Healthcare, Intel, Loss, Net income, Non-GAAP, Nonrecurring, Oracle, Restructuring, Results, S&P 500, Tech
San Francisco Chronicle (February 23)
“For American tech companies seeking talent, Ukraine’s highly educated population, with heavy emphasis on sought-after STEM specialties, is appealing, as is the fact that salaries there are about one-third to one-quarter of those for comparable jobs in the Bay Area.” Now these tech companies (including Google, Snap, Oracle, Grammarly, Ring, and JustAnswer) are urgently “revising contingency plans to protect their workers and businesses.”
Tags: Bay Area, Contingency plans, Educated, Google, JustAnswer, Oracle, Protect, Salaries, Snap, STEM, Talent, Tech companies, Ukraine
New York Times (July 14)
“The median compensation of chief executives at 200 of the nation’s biggest public companies came in at $15.1 million last year, a 16 percent jump from 2011…. The pay packages — including salary, bonus, benefits, stock and option grants — ranged from $96.2 million at Oracle to $11.1 million at General Motors.” Until the SEC determines rules for Dodd-Frank disclosure requirements, however, we won’t know just how excessive these packages are. Corporations should disclose pay gap information so investors, consumers, economists and others can monitor the ratio of C.E.O. pay to regular employee pay, which by some estimates now stands at between 200 and 300 to 1 in the U.S.“The median compensation of chief executives at 200 of the nation’s biggest public companies came in at $15.1 million last year, a 16 percent jump from 2011…. The pay packages — including salary, bonus, benefits, stock and option grants — ranged from $96.2 million at Oracle to $11.1 million at General Motors.” Until the SEC determines rules for Dodd-Frank disclosure requirements, however, we won’t know just how excessive these packages are. Corporations should disclose pay gap information so investors, consumers, economists and others can monitor the ratio of C.E.O. pay to regular employee pay, which by some estimates now stands at between 200 and 300 to 1 in the U.S.
Tags: Benefits, Bonus, Compensation, Disclosure, Dodd-Frank, Executive, General Motors, Options, Oracle, Pay gap, Requirements, Salary, SEC
