Let’s talk a little about Steve Ballmer, and his (reported) agreement to buy the Los Angeles Clippers for $2 billion.
The former CEO of Microsoft was not viewed especially fondly by investors. In August 2013, when he announced his retirement, Microsoft’s stock rose more than 7% on the news. I don’t care how many shares you own (and he owned a bunch), that’s gotta sting.
Ballmer did some good things. He started the ball rolling on the company’s transition from making software for traditional PCs to the mobile friendly offerings that are all the rage these days. Vanessa has a Microsoft Surface tablet, and it’s pretty cool. It’s every bit as good as my iPad. Ballmer might not get the credit for this stuff, but he was an instrumental part of the process. He also was a huge part in building Microsoft’s Xbox division, which has finally started to make money after years of red ink.
Ballmer’s list of gaffes is a little longer. The company’s start on the Surface wasn’t great, culminating with a $900 million write-off of unsold units. In 2007, he famously said the iPhone had “no chance” of gaining significant market share. Microsoft paid more than $8 billion for Skype in 2011, an acquisition that looks like an excessive valuation three years later. Ballmer was also CEO when Microsoft released Windows Vista, an operating system that was more hated than a dude butting in on a feminism rally on the Twitter.
Back to the Clippers. Ballmer is reportedly paying $2 billion for the franchise. The next highest bidder apparently offered $1.6 billion. That’s a huge premium. To put just the premium in perspective, the Milwaukee Bucks just sold for $550 million to a hedge fund that agreed to keep the team in the city. Ballmer could have bought the Bucks with just a little more than the premium.
The inflation is crazy. In 2011, the Philadelphia 76ers sold for $311 million. I know it’s the 76ers and they’re the Washington Generals of the NBA, but come on. Are the Clippers really worth six times as much as the 76ers? The Clippers don’t own their arena. Hell, they’re not even the biggest draw in their own city. How are the Clippers worth four times the Bucks? It’s insane.
But hey, at least Donald Sterling is going to do well. We all like him, right?
Onto Nelson’s freelance stuff. This is all stuff from Motley Fool, which you really ought to be reading if you’re a serious investor. After you’re done here, of course. PLEASE DON’T GO EVEN THOUGH THIS IS A POST OF LINKS. In conclusion, I’m confused.
Fun fact, did you know that China’s population only drinks about 10% of the milk that they do in Australia and U.K., per capita? If China actually starts to drink milk in a major way, this could be a huge opportunity for Saputo, Canada’s largest dairy company.
There’s a major development happening in power generation, involving an element you’ve never heard of. If this new technology actually works, we’d have an almost unlimited supply of power with very few side effects. It’ll be the biggest development since John Rockefeller struck oil.
The oil sands are a common investment theme. Invest in the oil sands, they say. They have an unlimited amount of oil, they say. Okay, great, but I have a little problem with that. Costs are basically running out of control.
You guys know me, I’m bearish on the Canadian banks. Here are three reasons why I’d be selling the banks, assuming I owned them. Which I don’t, unless you count my piggy bank which isn’t even in the shape of a big.
And finally, whenever somebody complains about the cost of their power/gas/phone bill, I usually have the same piece of advice. If you’re complaining about being gouged on a bill, it’s probably a good business to invest in. Here are some stocks that you’d look at if you were gonna invest in your utility companies.
And that’s it. See you guys tomorrow for the Sunday Morning Dump.