Having spent most of my life in the Bay Area, my view of what constitutes "big business" skews heavily towards tech. I'm sure folks from New York would say financial services and folks from Los Angeles would say entertainment. It blew me away when looking at the latest Forbes report on the world's most profitable corporations that Oil & Gas Operations dominated the top 6 by a healthy margin. What's more jaw dropping are the revenue numbers. I thought Microsoft's $62 billion was a lot but it's dwarfed more than 7 times over by ExxonMobil and Royal Dutch Shell. Just goes to show how far we need to go to ween ourselves off petroleum based products.

I was at the local coffee shop the other day and while waiting for my drink, I browsed through a full stack of New York Times. It got me to thinking, when was the last time I actually bought a newspaper? This isn't a commentary on whether newspaper companies are dying (they are) but the curious observation that I actually don't read printed newspapers any more. I used to have a subscription to the San Francisco Chronicle but canceled that around 2003 once I realized that everything I was reading was old news. I had already gotten the sports scores from Sportscenter and ESPN.com, stock quotes and business articles from Yahoo Finance, even local news from SFGate.com. It just got to the point where I was tired of paying for stuff I had already read (plus having to take a sack of newspapers to the recycling bin each week).
 
Nationally recognized publications like the New York Times and Wall Street Journal might still have a printed news audience but eventually, I just can't see how even they can keep up with the increasingly real-time demand of content. To be fair, most newspaper companies have a website but when will the cost and inefficiency of printing newspapers outstrip the newspaper subscription fees generated, if it hasn't already? I'm sure there's a demographic of folks who enjoy sitting down with a nice cup of coffee and the paper (I used to be one of them), but those folks are dwindling in number.

Apple's stock took a pounding after news was released that Steve Jobs would take about six months off to recover from his "hormone imbalance".

The New York Times is reporting that people familiar with Jobs' current medical treatment say it's not a recurrence of his pancreatic cancer but something that is not allowing him to absorb nutrients from his food. That's definitely a good sign and I'm glad he's taking time off to rest. It was said that stress wasn't helping in his recovery so now he can take all the time he needs without the prying eyes of the media.
 
Though Jobs is largely responsible for the turnaround of Apple almost a decade ago, I think Apple's in a current position to be fine without Jobs at the helm. As long as everyone else holds on to the ideals of making the highest quality products with no compromises that he espoused, Apple will continue to turn out winners. It was the years when Apple was led by folks more interested in profits than products that Apple was lost. With guys like Jonathan Ive and Bob Mansfield around, I think we can expect to see great products from Apple, even without Jobs steering the ship ... though it never hurts to have him in your corner.

As reported by the Wall Street Journal, Facebook has pulled its planned employee stock sale. This would have allowed the 800+ employees of Facebook to sell a portion of their stock to private investors - supposedly $900,000 worth or 10% of vested shares, whichever is less. Reasons that some outlets are stating was that Facebook couldn't find any private investors who wanted to buy the stock at a company valuation of $4 billion - a far cry from the $15 billion valuation Microsoft got for its $240 million investment.
 
I'm not really shocked that there were no takers at $4 billion. At the time of the original Microsoft investment, I thought Facebook's value was somewhere around $7 - $8 billion. Then when Techcrunch got a hold of some internal financials, I did a back of the envelope recalculation and stated that they should be valued at $4.5 - $5.25 billion which is 15 times projected 2008 revenues. Contrast that with Yahoo or Google which are valued at 2.19 and 4.13, respectively. These have gone down some recently but even if you calculate at January 2008 share prices, Yahoo and Google would still only trade at 4.44 and 10.91 times revenue, respectively. You can make the argument that these are more mature, slower growing companies but these are also PROFITABLE companies - in the case of Google, VERY PROFITABLE. Facebook, on the other hand has huge capital expenditures for servers/bandwidth ($200 million according to Techcrunch) and a hard to monetize audience. They may be GAAP profitable or break-even but most definitely not cash flow positive. Given the eventual slowdown in the online advertising market, I don't think it will get easier for them to squeeze more revenue from their users. However, the cost to support their growing legion of users is going to grow as they'll need more servers and bandwidth.
 
With that said, my new calculation of Facebook's value would only be at best 5 times revenue or $1.5 - $1.75 billion. Of course if they had allowed the employee sale to reset the value of their company, I doubt they'd raise enough through an eventual IPO to cover their growing capital expenditures. The more important question is, how much of the $516 million that they've raised is still there? My guess is that if they can't raise another $100+ million round soon, Facebook could be in for some tough times.

The Business section of the NYTimes.com site has an article about Tesla Motors, the Silicon Valley electric car start-up backed primarily by Elon Musk and a list of other high profile investors (including the Google guys).  The article centers around Tesla's recent request for a low interest loan of $400 million from the US Government as part of a fund whose goal is to improve US automakers' fuel efficiency.  Randall Stross, the reporter who wrote the article, has a very clear message as it relates to Tesla.  His argument is that Tesla is not a truly viable company and that tax payers shouldn't pony up for what he amounts to a boutique automaker that caters to the rich.  Tesla is behind schedule on its delivery of the $100K+ Roadster and even farther behind schedule on its plans for the more affordable $60K Model S sedan.  However, the bigger question to me, as a tax payer, is whether I think the future of America's auto industry is in the Big Three US automakers or somewhere else... say Silicon Valley?

When our family immigrated to the US in the 70's, the first car we owned was an old Mustang.  After a short trist with a VW Beetle and VW Vanagan (they were cheap), we next owned a Buick Skylark Wagon and a Ford Taurus.  My first car was a Dodge Colt.  From the Taurus my parents went to a Nissan Sentra, then a Honda Accord, and finally a Toyota Camry and Corolla.  After my Dodge Colt (I totalled it, but that's another story), my wife and I inherited a Maxima and a Camry.  Our first new car purchase ever was a Toyota Prius.  I remember the pride my dad had in being able to buy the Taurus which was considered at the time to be one of the better quality cars available.  However, since those days of the 80's and early 90's, the quality of American made cars has slowly declined while that of foreign brands from Japan and Europe have continued to increase.  It wasn't necessarily for lack of features/power/design but more for lack of reliability that forced us to move away from American made cars to Japanese.  Today, American cars have the perception of unreliability, whether true or not.  Given the issues that the Big Three face, I don't have much confidence that they'll be able to turn that around nor keep up with innovative companies like Tesla to deliver us the next generation of automobiles.  For that reason, I choose to cast my vote with the new unknown than the old unreliable.

UPDATE:  Jason Calacanis writes a very good response to Randall Stross' article.  It's posted on the Huffington post.