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When I was doing my MBA (a decade ago), one of the principal theories on why corporations exist was 1) Shareholder Value creation (grow wealth for investors) and a notable second was 2) Stakeholder Value creation- creating jobs for societies, providing tax to countries, providing employees with stable employment and incentives, and of course creating monetary value for shareholders.
There were two ways you could raise money- debt or equity. Debt had the advantage of interest payments being tax deductible. Debt payments had to be met regularly. Equity had the advantage that equity holders were the last ones to be paid in case of closing the company down, which justified that rate of return on equity is generally higher than cost of debt. Dividend payouts to stockholders could be deferred in a low revenue year or due to planning reasons.
Or in plain English, over the long term borrowing money from share holders in lieu of stocks was more expensive than selling bonds or borrowing from the banks.
Hybrid combinations of debt and equity were warrants and debentures that started off as one form of instrument and over a period of time gave much more flexibility and risk safety nets to both issuers and subscribers of capital. Another hybrid was stock options (now considered as a default option of rewarding employees in technology companies, but this was not always the case).
The use of call and put options in debentures, and the idea of vesting period in stock options was to promote lone term stability and minimize fluctuations in stock prices, employee attrition, besides of course to minimize the weighted average cost of capital. Venture capital was another class of capital known for both huge rates of return and risk taking (?)
But in today’s world where a Google has three classes of shares, companies trade shares before IPOs, and valuations of technology companies sink and rise by huge % over weeks (especially as they near IPO dates)- I wonder if traditional theories in finance need a much stronger overhaul.
or do markets need a regulatory overhaul, that would enable stock exchanges to have once more the credibility they had as the primary sources of raising capital.
Who will guard the guardians? Their conscience- the regulators or the news media?
There are ways of raising money that are not evil.
But they are not perfectly fair as well.
A recent announcement showing Teradata partnering with KXEN and Revolution Analytics for Teradata Analytics.
The Latest in Open Source Emerging Software Technologies
Teradata provides customers with two additional open source technologies – “R” technology from Revolution Analytics for analytics and GeoServer technology for spatial data offered by the OpenGeo organization – both of which are able to leverage the power of Teradata in-database processing for faster, smarter answers to business questions.
In addition to the existing world-class analytic partners, Teradata supports the use of the evolving “R” technology, an open source language for statistical computing and graphics. “R” technology is gaining popularity with data scientists who are exploiting its new and innovative capabilities, which are not readily available. The enhanced “R add-on for Teradata” has a 50 percent performance improvement, it is easier to use, and its capabilities support large data analytics. Users can quickly profile, explore, and analyze larger quantities of data directly in the Teradata Database to deliver faster answers by leveraging embedded analytics.
Teradata has partnered with Revolution Analytics, the leading commercial provider of “R” technology, because of customer interest in high-performing R applications that deliver superior performance for large-scale data. “Our innovative customers understand that big data analytics takes a smart approach to the entire infrastructure and we will enable them to differentiate their business in a cost-effective way,” said David Rich, chief executive officer, Revolution Analytics. “We are excited to partner with Teradata, because we see great affinity between Teradata and Revolution Analytics – we embrace parallel computing and the high performance offered by multi-core and multi-processor hardware.”
The Teradata Data Lab empowers business users and leading analytic partners to start building new analytics in less than five minutes, as compared to waiting several weeks for the IT department’s assistance.
“The Data Lab within the Teradata database provides the perfect foundation to enable self-service predictive analytics with KXEN InfiniteInsight,” said John Ball, chief executive officer, KXEN. “Teradata technologies, combined with KXEN’s automated modeling capabilities and in-database scoring, put the power of predictive analytics and data mining directly into the hands of business users. This powerful combination helps our joint customers accelerate insight by delivering top-quality models in orders of magnitude faster than traditional approaches.”
Read more at
Western countries are running out of people to fight their wars. This is even more acute given the traditional and current demographic trends in both armed forces and general populations.
A shift to cyber conflict can help the West maintain parity over Eastern methods of assymetrical warfare (by human attrition /cyber conflict).
Declining resources will lead to converging conflicts of interest and dynamics in balance of power in the 21 st century.
The launch of Sputnik by USSR led to the moon shot rush by the US.1960s
The proposed announcement of StarWars by USA led to unsustainable defence expenditure by USSR.1980s
The threat of cyber conflict and espionage by China (and Russian cyber actions in war with Georgia) has led to increasing budgets for cyber conflict research and defense in USA. -2010s
If we do not learn from history, we are condemned to repeat it.
Declining Populations in the West and Rising Populations in the East in the 21 st century. The difference in military age personnel would be even more severe, due to more rapid aging in the west.
Economic output will be proportional to number of people employed as economies reach similar stages of maturity (Factor-Manufacturing-Services-Innovation)