Nokia The company has gone down alarmingly in the last 2-3 years making it a classic B-School case study of how not to run a company. Nokia’s market capitalization has gone down by around 95% from a $100 billion to around 5-6 billion now. There are many reasons which have contributed to this downfall, the [...]
The DRAM Industry has seen a long and painful consolidation with many players going bankrupt and others being gobbled up by bigger companies. Many companies left the DRAM business because of high capital costs, relentless competition and technology upgrades every year. In the last five years only around 10 companies were left from Taiwan, Korea, [...]
The LED chip industry flourished in China as the government provided capital subsidy to small companies to buy MOCVD tools which help in making these chips. With oversupply, prices have crashed to below costs leading to bankruptcies. China is now seeing the 3rd Green Industry Bubble Bursting with LED chip manufacturers in China going bankrupt [...]
Structural Unemployment has become a big problem in developed countries where middle class jobs are being permanently destroyed. The advent of modern communications and technology has made a lot of the old jobs redundant . Modern Technology is destroying entire supply chains , companies and jobs in a painful bout of creative destruction. Many of the workers [...]
India has for long lacked an agency to control the monopolistic and predatory practices of Indian companies . The old MTRP Act had become quite toothless after the 1991 reforms and the Indian industry had turned into the wild west. Monopolies and oligopolies could operate quite freely and there was nobody to investigate price fixing and cartelization . [...]
There is no disputing the fact of Facebook dominance in social media but its model of making money is far from proved to give it such a huge market value . The underwriters of the company are said to have massive amounts of shares worth billions which they have bought to hold the company’s stock price above the IPO price of $38. The trading was marked by a number of glitches which is now being investigated by SEC. This has become a regular occurence reducing trust in the US capital market systems . A lot of the future earnings power is already built into the stock price of the company at $100 billion. It will take a lot of effort to get to the earnings level to justify the market price . In the fast changing technology landscape that is a huge risk . 3 years ago nobody would have questioned the dominance of Nokia and RIMM in the mobile space . But now these companies are fighting for survival. Stock picking is a game of probabilities and in the case of Facebook the current stock price does not justify the risk in buying it.