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Posts Tagged ‘Finance’


BBC News reported World Bank’s report of slower economic growth in the year 2011. World Bank has predicted that global GDP growth will be 3.3% against 3.9% in 2010. It has also predicted a strong growth in the emerging economies with India and China leading from the front.

Well, let us try to take a closer look. Please note that I am not an expert. I am just a reader of news who have developed an interest into looking at different things and hope to share my thoughts. I have no doubt that the India and Chine are going to lead the world economic growth but at what cost. China is keeping its currency manipulated so that its exports benefits the country’s position. India, though not exactly an export-oriented country but definitely a service-providing company. Products are not generally produced here rather they are definitely serviced here.

Even though I, too bet on the Indian and Chinese economies, I have few concerns. Firstly, the population. There is no control over the population in these countries. And till date there is no solid system to measure unemployment or the population itself correctly. In such a scenario, would it safe to have its per-capita, GDP and other measures of economy to be absolutely correct. I doubt it. Secondly, I still don’t believe that the consumption power is good here. I would request someone to find out if the commodities and goods produced in China are really consumed within the country. I believe that the figures could be surprising for some. I still feel that majority of goods are consumed not here rather outside. So, I feel that the real consumer base is the developed countries. Having said that, i must say that we are improving but it is going to take quite a time to catch up. Thirdly, dependency on Oil. We all know all the emerging and developing countries rely heavily on Oil, whose price is hovering around $90. I feel that that Oil price should be around $120. One thing that China and India say in their defense in terms of their oil consumption is their per capita consumption is far less than the consumption of US. But boss, China and India has the largest and second largest population of the world. You guys take the call. Are the defensive statements justified? Lastly, Food Inflation. Inflation of food is at its peak. We have seen the effect of increase in the prices of Onion in India. People went crazy and made the hell out of the government. In the past, we have seen that the governments have lost power at the Central government in the past. Oppositions won over the ruling government just on the basis of high Onion price. Considering the current scenario, all the vegetables are at their record high. How it is going to affect the people and the economy, in general, would be interesting to watch closely but I am sure if the situation remains same as of now, India will definitely suffer.

Comparing the prevailing scenarios of developing and emerging countries’ scenarios, economies of developed countries will have to also tackle few obstacles. Among all of them, the most important and challenging thing will be “Unemployment” World Bank predicts that the unemployment scenario would remain dismal. So, I feel it is going to hurt more than anything else for them. Secondly, European scenario does look so good as of now.  I somehow feel that the European debt crisis is going to remain bad and it might not improve as quickly as we might have wanted it to. Thirdly, the government debt will continue to mount and may cause imbalances in their statements, not a good sign at all.

To conclude, I feel that the all the economies of the world will see some nice challenges and if they are tackled appropriately, I am sure that we will redefine how businesses will be done in future. Hope that the future brings more prosperity and happiness all around, equally 🙂

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We are just few days into the new year and we are already seeing some exciting news coming. I read an article today that pointed that LinkedIn might have plans to go public this year. Honestly, I was not surprised. LinkedIn has been one of my favorite and I have gained immensely by staying in the vicinity of some amazing people. LinkedIn gave a new definition of professionalism. Recruitment took a new shape with LinkedIn and I must say that I would not be surprised to find certain job openings coming first on LinkedIn than other recruiting websites like Naukri or Monster. So, what made LinkedIn click? Let us try to understand few things that LinkedIn did great:

  • Stay connected with people we meet and interact.
  • Online references and of course, authenticity can be more trusted here.
  • Great Connectivity because one could find Barack Obama to Hillary Clinton to Bill Gates. It was phenomenal because I believe LinkedIn paved the way on which twitter attracted celebrities and legends.
  • Knowledge sharing platform across groups.

I am not a premium member at LinkedIn and hence, not the right person to comment on its premium services. But I cannot ignore the fact that it might be really good because LinkedIn generates a considerable amount of revenues from its premium users. Other than premium services, advertising is another source on which LinkedIn relies to generates its revenues.

LinkedIn claims to have more than 85 million members, which is a good number, I must say. So, what could be its value? LinkedIn never commented on its valuation and none close to it too. SharePost gives LinkedIn an implied value of $2.2 Bn. Now, I am not an expert but looking at the popularity of LinkedIn and the kind of platform it has provided to its members, I will not be surprised to see LinkedIn valued anywhere near to $4 – 5 Bn. I hope that I would have the technical know-how to evaluate a company’s profile but unfortunately, I dont’ have it now. Please don’t ignore the investment of Sequoia Capital in LinkedIn. Yes, it is the same company that invested in Google, Yahoo, Cisco, Apple and Oracle to name a few. And we all know what these companies went up to become.

Now, lets come to an interesting aspect. Why all of a sudden buzz of LinkedIn going for its IPO? And trust me when I say that LinkedIn might also be joined by twitter and Zyngya, in particular to go public. The reason is simple: FACEBOOK. The shark is in the sea and even though there are a lot of speculations of when facebook might go public, but all of us know if LinkedIn, Twitter and Zyngya don’t go public before Facebook, it might face the heat later. I completely agree with some of the experts that if Facebook goes public first, others might feel the pinch because it would be difficult to come out of the euphoria of the IPO of facebook. I can safely say that day and year Facebook decides to go public, it would be the FACEBOOK year. So, here was th news that kept everyone thinking:

“Facebook rocked the world when Goldman Sachs bought 1% stake in the company for whooping $500 mn. This makes Facebook valued at $50 Bn and yet to go public.”

Now, Facebook has mentioned of no intention of going public before late 2012 but here is the reason it might not take long. In USA, the definition of a private firm stands good if there are no more than 499 stakeholders and with Glodman Sachs’ investment, SEC has already initiated a thorough look-out into Facebook. Secondly, remember Google also never wanted to go public till Goldman Sachs invested in it and we know the history: with 10 months, Google went public. So, will Facebook follow the same route? Only time will answer the question.

To sum up, I am excited and I am more excited for these small firms, especially Facebook. A software application launched from a dormitory of a school in 2004 has today been estimated to be valued at $50 Bn. As we say the fall of 105-year Great Lehman Brothers, we also say the great Rising of Facebook. We will try to keep a close watch on the exciting developments of the social networking era 🙂

PS: Did you know Goldman Sachs does not allow to use Facebook in office? Now, will they remove the restriction after its investment in Facebook ;-)?

Sources: http://www.bloomberg.com/news/2011-01-06/facebook-at-50-billion-valuation-is-looking-more-like-tencent-than-google.html

http://www.reuters.com/article/idUSTRE7050DC20110106

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