According to the Wall Street Journal, 'tech conglomerate' International Business Machines Corp. (IBM) is in talks to purchase storage systems industry peer Sun Microsystems (JAVA). While terms are still being negotiated, rumors suggest IBM is willing to pay up to $8 Billion in cash to acquire its one-time rival. If true, the acquisition would easily surpass the company's $5 Billion purchase of Cognos in January 2008 to become the most expensive deal in IBM's near 100 year corporate history (FYI, Sun currently has about $2.5 Billion in cash sitting on its balance sheet so the real/net cost of the deal to IBM would probably be somewhere around $5.5 Billion).
With the acquisition of Santa Clara, California-based Sun Micro, IBM would immediately be adding some 35,000 new employees and about $13 Billion to annual company sales. More importantly though, the purchase of Sun would allow #1 IBM to significantly increase its lead in worldwide server marketshare over #2 Hewlett Packard (HPQ). Per the below pie chart, IBM's server marketshare would increase by 10.1% and total 42%as a result of the acquisition...meanwhile, HP's share number holds steady at 29.5%. Scary as that might be, perhaps an even more daunting prospect for the rest of the server industry would be the potential $8 Billion deal's impact on IBM's worldwide UNIX server marketshare. If the deal were to go through and of course pass regulatory approval then IBM's UNIX share would instantly soar an enormous 28 points to a MONOPOLISTIC 65.3% !
Per the below link, IBM appears interested in doing the deal for several reasons, including:
1.) INSTANT MARKETSHARE - IBM will immediately gain 10 points of marketshare in overall worldwide server sales
2.) 'HOT' END USERS - Many of Sun's customers operate in the telecommunication and government sectors of the economy...two end user industries IBM is explicitly targeting and focused on growing during today's relatively tepid macroeconomic backdrop
3.) LEVERAGE IBM's CORE S + S - IBM will attempt to sell its carefully-crafted, higher margin bundles of server-oriented Software + Services to its newly acquired storage system customers
4.) LEVERAGE SUN's CORE R + D - IBM will seek to leverage the fruits of SUN's widely regarded Research + Development efforts (JAVA, Solaris, SQL, solid state storage drives, advancements in cloud computing, etc.) into its own existing and future products/solutions
Today's Standard & Poors loooooong anticipated downgrade announcement of General Electric's credit rating from AAA to AA+ (the next level down) most likely portends that Moody's Corp (MCO) will be quickly following suit with its own credit ratings downgrade of GE. If Moody's indeed decides to downgrade GE then there will only be4 companies operating in the S+P 500 UNIVERSE today commanding Moody's HIGHEST Level Credit Rating of AAA:
* Automatic Data Processing (ADP) - a $18 Billion marketcap financial firm
* Exxon Mobil (XOM) - a $330 Billion mcap oil and gas company
* Microsoft (MSFT) - a $150 Billion mcap technology company
* TIAA-CREF (private...not in the S+P 500) - a not-for-profit retirement organization for 3 million people
FYI, A triple A credit rating is desirable as it essentially allows companies to borrow money at the cheapest interest rates possible (allowing said company to maximize potential returns from that borrowed money). General Electric held Standard & Poor's AAA credit rating since 1956. Per its most recent annual company filings with the SEC, and under the terms of its existing debt instrument guarantees and covenants, GE would have to post additional collateral on its long term debtif its credit ratings were to be cut four more levelsto below AA-/Aa3.
Highly regarded former General Electric CEO and New York Times best selling author,Jack Welch, was interviewed this morning in an interesting economy-centric segment on MSNBC's Morning Joe. Mr. Welch served as Chief Executive Officer of GE from 1981 through 2001 and under his stewardship, the company increased its sales by some 380% (from revenues of $27 Billion in 1980 to $130 Billion in 2000) !
In the below three minute clip, the highly accomplished and often dynamic Mr. Welch shares some of his candid, proprietary, 'STRAIGHT FROM THE GUT' thoughts on President Obama and the current timetable of his ambitious agenda(FYI, President Obama's 2009 budget currently forecasts$3.2 TRILLION of government spending). Worth the watch:
Since April 4th, 2008, the stock of U.S-based 'super conglomerate' General Electric (GE) has been in an absolutely vicious, nauseating downtrend falling from $37.56 a share to today's difficult-to-fathom price of just $7.06/share (FYI, please note the fitting JOKER-likeportrait of GE CEO Jeff Immelt above). GE, a once near $600 Billion GOLIATH of a company, has been crushed by the simultaneous burstings of the REAL ESTATEand CREDIT asset bubbles and seen its market value shrink a jaw-dropping 80% over the past 11 months!
The reason for the steep, GUT-wrenching decline??? The vast amount of Joker-likeUNCERTAINTYsurrounding the value of General Electric's ENORMOUS and OPAQUE $650 Billion GE Capital business, and more specifically, its $50 Billion plus global REAL ESTATE portfolio. For some perspective, the size of GE Capital is roughly equivalent to the size of the U.S's 6th largest bank.
Further complicating matters is the Joker-likeaccounting methodology GE Capital currently uses to value its holdings. The world's largest maker of jet engines and power turbines told shareholders last week that only 2%of GE Capital Corp's $650 Billion portfolio of assets are being valued today based on current market prices (i.e: marked to market). According to CreditSights Inc, an independent bond research firm based out of New York, the remaining 98%or some $624 Billion of GE Capital assets (most of which are loans or senior secured debt tied to assets like aircraft) are being valued at levels that General Electric established many years ago! Per the bottom referenced Bloomberg link, here are some quick facts related to GE Capital's dubious real estate unit, GE Real Estate :
* GE Capital generated $8.6 Billion or 48% of General Electric's $18.1 Billion of profits in 2008...that compares with about 20% in the late 1980's...General Electric expects GE Capital to contribute $5 Billion of profits in 2009
* GE Real Estate profits fell by $1.1 Billion in 2008 (vs. 2007)...On January 23rd, 2009, GE stated that GE Real Estate will take more than $4 Billion in pretax losses and post an overall loss of about $500 million in 2009
* According to SEC regulatory filings, General Electric's commercial real estate business consists of both property and real estate loans. The company has stakes in or financing on8,000 different properties scattered in 2,600 citieswith an average investment of less than $10 million
* According to Keith Sherin, General Electric's Chief Financial Officer, GE has about $50 Billion of commercial real estate loans and $2.9 Billion of commercial mortgage-backed securities
* GE takes a conservative (...ironic that shareholders should actually read this word as 'DANGEROUS'...)approach in terms of accounting for the value of its real estate holdings as the company's 'mark to market' methodology is similar to the accounting used by real estate investment trusts. GE accounts for its property holdings at the price they paid for them and then chooses to depreciate the values over time rather than actually marking the assets to their current market values. According to GE spokesman Russell Wilkerson, GE's property portfolio currently generates about $1.7 Billion in profits while the company depreciates the assets by about $1.1 Billion per year. GE is currently forecasting loan reserves of (only) 2.5%.
* GE's property includes office buildings, warehouses and apartments...about71% of GE's properties are located outside of the U.S., primarily in Europe, Asia, Canada and Mexico
* GE owns about $22 Billion of real estate assets in Europe...about 1/3 of which consists of real estate debt and non-performing loans
* In November 2007, GE purchased $2.8 Billion of commercial real estate loans from England's Bradford & Bingley. According to Investment Property Databank, U.K. commercial property values had fallen only 3% from their July 2007 peak at the time of GE's purchase...now prices have fallen 37% from that peak
* In 2006, GE purchased Arden Realty Inc. for $3.2 Billion...at the time, Arden was the largest publicly traded land owner in Southern California
According to Moody's Economy.com, an estimated 13.6 million U.S. borrowers ended 2008 UNDERWATER on their home mortgages. FYI, 'underwater' borrowers refers to those individuals being in the difficult and unfortunate position of currently owing more on the mortgage of their property than the actual underlying value/WORTH of the property itself. Per the above Wall Street Journal chart, this figure is projected to rise in 2009 and is up from the 11.8 million homeowners that were underwater at the end of 3Q08. Lastly, please note that as recently as 2Q07, the number of underwater homeowners was only 4 million. Since then (...ENTER the July 2007 seismic collapse of theU.S. SUBPRIME mortgage market...), this figure has exploded upwards by nearly 10 million or 250% !
Data Courtesy: Economy.com + The Wall Street Journal
According to the Center for Retirement Research at Boston College, PUBLIC PENSION plans in the United States are UNDERfunded by some $1 TRILLION! Per the disconcerting Bloomberg link below:
* By LAW, states must guarantee ALL public pension fund debts
* As of December 16, 2008, public pensions in the U.S. had Total Liabilities of about $2.9 TRILLION vs. Total Assets equalling approx only $2 TRILLION...a 30% shortfall!
* In terms of Asset Mix, public pension funds typically place 60% of their assets in STOCKS, 30% in bonds/fixed income, 5% in real estate and the remaining 5% in 'riskier assets' such as hedge funds or commodities
* A shortfall of $1 TRILLION has been able to occur/go 'unchecked' due to pension funds being allowed to OVERstate expected market returns on their non-bond pension assets
* According to Bloomberg, actuaries consistently allow public pension funds to report artificially high expected rates of return on their non-bond assets - most often 8.0% and as much as 8.75% (fyi, that's more than the 6.9% billionaire investor Warren Buffet reports/assumes for Berkshire Hathaway Inc.'s pension fund)
* For perspective's sake, some rather disturbing, currentreal world Examples:
- The U.S.'s Largest Public Pension fund, California Public Employees' Retirement System (CALPERS), has been expecting/assuming an annual market return of 7.75% for the past 8 years (and 8% before that)...meanwhile, CALPERS real annual return from the stock market during December 1998-December 2008 has only been 3.32% !
- The Teacher Retirement System of Texas, the 7th largest U.S. public pension fund, reports each year that its expected/assumed market rate of return is 8%...meanwhile, the pension's real annual return from the stock market during the past 10 years has been only 2.6% !
While the media continues to focus on the collapse of the U.S. subprime mortgage market, it is also worth noting the recent decline in lending activity and rise of delinquencies for the highest end of homeowner loans - JUMBO mortgage loans. According to LPS Applied Analytics, a mortgage data service based out of Jacksonville, Florida, about 2.6% of the homeowners who took out JUMBO mortgage loans during 2008 are ALREADY at least 60 days delinquent...while this rate pales in comparison to the current 20% delinquency rate affecting 2008 subprime borrowers, it is still significant because this is the fastest pace of Jumbo delinquencies in at least the last 15 years, when LPS began tracking the data.
* The national average for a 30 year fixed rate jumbo mortgage was 6.57% this week compared with 5.34% for a prime conforming loan. According to BanxQuote CEO Norbert Mehl, the spread between Jumbos and primes had been only about 20 basis points (0.2%) "for several decades"...however, since August 2007 + the collapse of the subprime mortgage market, the spread has consistently stayed in between 100 and 200 basis points (1.0%-2.0%)
* A prime conforming loan is a mortgage available to borrowers with top credit scores that is eligible for sale to either Fannie Mae or Freddie Mac...currently the Fannie-Freddie cap is set at $417,000 in most places and up to $729,750 in areas with higher home prices
* JUMBO lending activity slowed in the 4th quarter of 2008 to $11 Billion, or 4% of the mortgage market (vs. 14% in 2007)...the lowest quarterly amount since Inside Mortgage Finance started tracking data back in 1990
* Top 5 U.S. Jumbo mortgage lenders are: Chase Home Finance LLC., Bank of America (BAC), Washington Mutual (aka the artist formerly known as WM), Wells Fargo (WFC) and Citigroup (C)...the Top 5 Jumbo lenders originated a combined $55.3 Billion in jumbo loans during 2008, they lent just $4.3 Billion(less than 8%) of that total during the 4th qtr of 2008
* According to LPS Applied Analytics, the average credit score for a 2008 jumbo loan was 762
* President Barack Obama's Homeowner Affordability and Stability Plan, announced this week, has NO provision to help JUMBO mortgage borrowers
Stock market commentatorJim Cramer is EXTREMELY negative ('bearish') on the final version of the $789 Billion U.S. economic stimulus package that is making its way through Washington. According to Cramer, host of CNBC's popular stock market-themed television show Mad Money, Congress and President Obama both deserve an 'F' for the passage of this 'total fraud' of a plan. Perhaps more significantly, Mr. Cramer sees NO actionable stock trades as a result of this package (as a humble fan of CATERPILLAR/CAT, I find this point particularly discouraging). Please find his sobering take below courtesy of TheStreet.com :
Through February 10th, 2009, the U.S. government has pledged a total of about $8.8 TRILLION towards fixing the country's ailing financial system. Of this $8.8 Trillion committed, 'only' about $2 Trillion has been actually spent thus far.
* Please check out the details courtesy of the insightful New York Times link below:
Includes direct investments in financial institutions, purchases of high-grade corporate debt and purchases of mortgage-backed securities issued by Fannie Mae, Freddie Mac and Ginnie Mae.
2.) The Government as Lender:
$2.4 Trillion
Spent: $666 billion
A significant expansion of the government's traditional overnight lending to banks, including extending terms to as many as 90 days and allowing borrowing by other financial institutions.
3.) The Government as Insurer:
$1.8 Trillion
Spent: $252 billion
Includes insuring debt issued by financial institutions and guaranteeing poorly performing assets owned by banks and Fannie Mae and Freddie Mac.
Oppenheimer & Co. financial industry analyst Meredith Whitney is widely recognized on Wall Street as being one of the first individuals to accurately identify and predict the size and scope of the current economic woes facing the U.S.'s financial system. Mrs. Whitney correctly predicted and warned clients (via documented letters of research) of the oncoming financial industry meltdown back in October 2007, a full six months prior to the March 2008 collapse of (the artist formerly known as)Bear Sterns. As a result, her forward-looking financial system and policy thoughts are now officially REQUIRED viewing material...these come courtesy a Bloomberg TV interview aired recently on February 4th, 2009:
In addition to her insightful thoughts on the U.S. government's 'BAD BANK' proposal, Mrs. Whitney also advises investors to continue staying away from investing in the common stock of U.S. banks. Per about 8 minutes into the interview, Mrs. Whitney states: "...What we do know is that the existing banks need more capital for a number of reasons. If you are an existing shareholder, if you are an equity shareholder, then you are at the absolute bottom of the totem pole. Your risk is at the highest...Investors should NOT even consider owning banks at this point on an equity basis because you don't know what you're getting (owning) but you do know that with any change that occurs (due to government intervention), you are at the bottom of the totem pole. So your interests will be considered absolutely last by the government and in many cases, your interests will be 'crammed down'."
During a February 5th, 2009 interview with Bloomberg TV, PIMCO managing director Bill Gross firmly expressed his belief that the U.S. government should be spending TRILLIONS, as opposed to justhundreds of billions, of dollars on stimulating the U.S economy in order to avert a 'mini Depression'.
Please find the complete 20 minute interview below:
* Bill Gross (about 9 minutes into the interview): "I don't think (the current proposed $800 Billion U.S. economic stimulus plan) is enough..there's debate back and forth and $700 and $800 Billion sounds like a lot of money (but) the problem is that there has been trillions of dollars of credit, bank capital and spending power extracted from this economy over the past 6 to 12 months...you can look at it from the standpoint of the wealth effect, you can look at it from the standpoint of lending of banks, or the shadow system, or all of that in combination, but the fact is that this economy requires support from the government, a check from the government in some form or fashion in the trillions as opposed to the hundreds of billions...I think President Obama was right, there's a potential catastrophe if Washington continues to focus on a hundred or two hundred billion dollars, we need something in the trillions."
Per the $825 Billion President Obama U.S. Economic Stimulus Package, the Senate is currently proposing that $340 Billion will allocated to rebuilding America's economy via The American Recovery and Reinvestment Plan. Below are the current specific financial highlights of the The American Recovery and Reinvestment Plan courtesy of the U.S. Senate Appropriations Committee 1/23/09 press release (FYI, the link to the seven page press release is included at the bottom of this post).
Please be advised that the disclosed plan below is subject to revision as it will be reviewed on the floor of the U.S. House of Representatives next week.
The American Recovery and Reinvestment Plan focuses on 5 critical areasto rebuilding our economy and creating the conditions for economic growth in the long-term :
* Infrastructure and Science - $140 Billion
* Education and Training - $125 Billion
* Energy - $51 Billion
* Protecting the Vulnerable - $25 Billion
* Health - $16 Billion
It is estimated that this legislation will create or sustain 4 million American jobs.
* Infrastructure and Science: $140 Billion
In order to rebuild our weakening economy, these investments in our physical and cyber infrastructure will put Americans immediately to work rebuilding our crumbling roads and bridges, and will also enable the creation of a stronger and more efficient infrastructure for the 21st century economy. Highlights include:
• School Modernization: $16 billion to repair, renovate and construct public schools in ways that will raise energy efficiency and provide greater access to information technology, and $3.5 billion to improve higher education facilities.
• Broadband: A total of $9 billion for the National Telecommunications and Information Administration’s (NTIA) Broadband Technology Opportunities Program to improve access to broadband.
• Public Parks: $3.4 billion for repair, restoration and improvement of public facilities at parks, forests, refuges and on other public and tribal lands.
• Department of Defense Facilities: The stimulus includes $2.4 billion for quality of life and family-friendly military construction projects such as family housing and child care centers.
• $3.2 billion for Facilities Sustainment, Restoration and Modernization to be used to invest in energy efficiency projects and to improve the repair and modernization of Department of Defense facilities to include Defense Health facilities.
• $3.4 billion for VA hospital and medical facility construction and improvements, longterm care facilities for veterans, and improvements at VA national cemeteries.
• $1.2 billion to accelerate procurement and installation of baggage screening and checkpoint security equipment atairports across the country.
• $500 million to secure high risk critical infrastructure such as dams, tunnels, and bridges.
• $4.6 billion to construct, repair or rehabilitate water resource infrastructure nationwide to benefit navigation, hydropower, flood control, environmental restoration, shore protection and other purposes.
• $1.4 billion to construct, repair, or rehabilitate water delivery infrastructure in the Western U.S. to benefit irrigation, municipal and industrial water supplies, power production, and environmental and other purposes.
• $2.25 billion for the HOME Investment Partnerships Program block grant to enable state and local governments, in partnership with community-based organizations, to acquire, construct, and rehabilitate affordable housing and provide rental assistance to poor families.
Transportation:
• $27 billion for formula highway investments.
• $8.4 billion for formula investments in public transportation.
• $5.5 billion for competitive grants to state and local governments for surface transportation investments.
• $1.3 billion for investments in our air transportation system.
• $1.1 billion for investments in rail transportation.
• $160 million for investments in maritime transportation.
• Public Lands Roads: $830 million for repair and restoration of road on park, forest, tribal, and other public lands.
Public Housing:
• $5 billion to the public housing capital fund to enable local public housing agencies to address a $32 billion backlog in capital needs - especially those improving energy efficiency in aging developments.
• $2.1 billion for full-year payments to owners receiving Section 8 project-based rental assistance.
• Neighborhood Stabilization Program - The bill includes $2.25 billion for the redevelopment of abandoned and foreclosed homes.
• Homeless Prevention Fund - The bill includes $1.5 billion for homeless prevention activities, which will be sent out to states, cities and local governments through the emergency shelter grant formula.
Environmental Clean-Up/Clean Water:
• A total of $6.4 billion is directed towards environmental cleanup of former weapon production and energy research sites.
• $6 billion for sewer, wastewater, and drinking water systems nationwide through EPA’s Clean Water and Drinking Water State Revolving Funds.
• $1.4 billion to support $3.8 billion in loans and grants for needed water and waste disposal facilities in rural areas.
• $1.4 billion for EPA’s nationwide environmental cleanup programs, including Superfund.
Science:
• National Science Foundation (NSF) Research: $1.4 billion in funding for scientific research, infrastructure and competitive grants.
• National Aeronautics and Space Administration (NASA): $1.5 Billion for NASA, including $500 million for Earth science missions to provide critical data about the Earth’s resources and climate.
* Education and Training: $125 Billion
In order to compete in the 21st century, Americans must have a well-educated workforce, capable of adapting to an ever-changing economic environment. Investing in education now will ensure that the next generation of American workers is ready and able to meet the challenge of global competition. In the near-term, millions of workers have seen their jobs disappear, and find themselves unable to match their skill sets with existing opportunities. Providing job training in new and expanding fields will help to lower the unemployment rate and help today’s workers better compete against foreign competition. Highlights include:
Education:
• $39 billion to local school districts and public colleges and universities distributed through existing State and federal formulas.
• $15 billion to states as incentive grants as a reward for meeting key performance measures.
• $25 billion to states for other high-priority needs such as public safety and other critical services, which may include education.
• Title I: $13 billion to help close the achievement gap and enable disadvantaged students to reach their potential.
• Special Education/IDEA: $13 billion to increase the Federal share of special education services to its highest level ever.
• Pell Grants: $13.9 billion to increase the Pell Grant maximum award and pay for increases in program costs resulting from increased eligibility and higher Pell Grant awards.
Training:
• Training and Employment Services: $3.4 billion for job training including formula grants for adult, dislocated worker, and youth programs.
• Vocational Rehabilitation State Grants: $500 million for state formula grants to help individuals with disabilities prepare for and sustain gainful employment.
• Employment Services Grants: $400 million to match unemployed individuals to job openings through state employment service agencies and allow states to provide customized reemployment services.
* Energy: $51 Billion
The bill provides investments in areas critical to the development of clean, efficient, American energy, including modernizing energy transmission, research and development of renewable energy technologies, and modernizing and upgrading government buildings and vehicles. Highlights include:
• $40 billion to the Department of Energy for development of clean, efficient, American energy.
• GSA Federal Fleet: $2.6 billion to replace older motor fleet vehicles owned by the Federal Government with alternative fuel automobiles that will save on fuel costs and reduce carbon emissions.
• Green Buildings: $6 billion for repair of federal buildings to increase energy efficiency using green technology. This funding will help eliminate the backlog of $8.4 billion in building repair projects.
• $1.3 billion for grants or loans to owners for energy and green retrofit investments.
• $613 million for Department of Defense energy efficiency upgrades and construction of alternative energy projects, including wind and solar power and photovoltaic system installation.
• $400 million for rural businesses initiatives including development of renewable energy.
* Protecting the Vulnerable: $25 Billion
The current economic crisis has affected all Americans, but none more so than the most vulnerable among us. The spending proposed here will serve to lessen the blow of the current recession, providing immediate relief for children, the poor, and others who may find themselves struggling to put food on the table or a roof over their head. It will also address the urgent need to provide safe and secure places to live, even in neighborhoods that are struggling with high unemployment and surging foreclosure rates. Highlights include:
Nutrition:
• $16.5 billion for additional Supplemental Nutrition Assistance Program (SNAP) benefits (formerly the Food Stamp program).
• Special Supplemental Program for Women, Infants, and Children (WIC). The Committee recommends a total of $500 million for WIC. In addition, the bill provides $150 million for Food Banks.
Helping Children:
• $4.6 billion to increase investments in early childhood programs.
Other Programs:
• Community Development Financial Institutions: $250 million to immediately provide capital to qualified community development financial institutions (CDFIs) to invest in the development of underserved communities.
• Social Services Block Grant: $400 million for States and local non-profits to deliver critical services to unemployed and low-income individuals struggling with the effects of the recession.
• Homeowners Assistance Program: $410 million to expand the Department of Defense Homeowners Assistance Program (HAP) during the national mortgage crisis.
* Health: $16 Billion
The bill provides investments in areas critical to immediate and long-term healthcare for millions of Americans. Improved information technology, research facilities, and health and wellness programs, will all provide a better foundation for providing quality healthcare to consumers. Highlights include:
Health Information Technology:
• Health Information Technology: $5 billion to jumpstart efforts to computerize health records to cut costs and reduce medical errors.
Research:
• $3.5 billion to conduct biomedical research in areas such as cancer, Alzheimer’s, heart disease and stem cells, and to improve NIH facilities.
• $1.1 billion to the Agency for Healthcare Research and Quality, NIH and the HHS Office of the Secretary to evaluate the relative effectiveness of different health care services and treatment options.
Treatment and Prevention:
• Prevention and Wellness: $5.8 billion to fight preventable diseases and conditions.
• Pandemic Flu Preparedness: $870 million to complete funding for the President’s initiative on pandemic flu preparedness.
* Small Business, Law Enforcement, Other: $8 Billion
• $110 Million for GAO and Agency Inspectors General in order to provide appropriate oversight of spending contained in this bill.
• Loans for Small Businesses: $730 million to stimulate lending to small businesses.
• State and Local Law Enforcement: $3.95 billion total to support law enforcement efforts.
According to the U.S. Department of Labor's Bureau of Labor Statistics, the national unemployment rate hit 6.7% in November 2008. Drilling down to the STATE level, below are the Top 10 Highest Unemployment Rates in the United States:
Some interesting MANHATTAN Commercial Real Estate Market STATS courtesy of Bloomberg:
* According to real estate broker Cushman & Wakefield, AVERAGE 4th QUARTER RENTS in Manhattan dropped 4.8% from 3Q08 to $69.44 a square foot
* Total 2008 OFFICE SPACE LEASING ACTIVITY in Manhattan dropped to 19.1 million square feet...the lowest level since 2001
* AVAILABLE LEASING SPACE in Manhattan increased by 43%over year end 2007 to more than 31 million square feet (...AVAILABLE Sublease space in Manhattan more than doubled in 2008 to 8.2 million square feet...)
* Across the entire United States, OFFICE VACANCIES rose to 14.4% during 4Q08...during this time, 'asking rents' actually fell 0.3%
* According to broker Studley Inc, MANHATTAN OFFICE VACANCIES rose to 10.4% during 4Q08...the 1.5% increase over 3Q08 is the largest quarterly increase 'in supply' since the 3rd quarter of 2001
I am an avid follower of all things related to the expansion and forward progress of our dear GLOBAL Economy. I use this blog as an informal forum, and data repository of sorts, to both share + catalog my thoughts on the economy, and potential 'investible' stocks, sectors and themes in the market. If you act on any of my ideas, or observations, then please realize you are doing so at your own risk. Please feel free to leave interesting, thought-provoking comments on the blog ('Random Thoughts of Brill/Blog-iance')..if you're $hy you can do so Anonymously. If you wish to contact me directly with your comments, then please do so via e-mail, THANKS.
According to the Wall Street Journal, 'tech conglomerate' International Business Machines Corp. (IBM) is in talks to purchase storage systems industry peer Sun Microsystems (JAVA). While terms are still being negotiated, rumors suggest IBM is willing to pay up to $8 Billion in cash to acquire its one-time rival. If true, the acquisition would easily surpass the company's $5 Billion purchase of Cognos in January 2008 to become the most expensive deal in IBM's near 100 year corporate history (FYI, Sun currently has about $2.5 Billion in cash sitting on its balance sheet so the real/net cost of the deal to IBM would probably be somewhere around $5.5 Billion).
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