Zurich has come up with some fascinating ideas in its 'house of the future'. Modular houses, for instance, which may be flexible - add or subtract rooms as required.
It would be interesting to see how the planning system adapted to that idea though. I rather fear people would find that once it came to getting planning permission, the modular idea would suddenly become inflexible.
In fact, as someone working quite a lot of my time in the IT world, I find reusability and modularity seem very natural approaches to use. They simply haven't been applied much in modern housing.
Now I'd like to go a step beyond what Zurich is saying and see how modularity might change the way housebuilders have to compete. Currently, the big part of being a property developer is acquiring sites. Land bank issues are probably ninety percent of the USP for a developer - frankly the quality of the building that results is not what makes the business work. It just has to be good enough (satisficing, not maximising, to use the economics jargon).
With modularity, though, householders could become their own developers. Purchasing a plot would enable you easily to add a module. The really crucial gap in the market now becomes the module factory - the manufacturer rather than the builder.
Who's in this space right now? Very few builders, as far as I can see. A precious few are using modular construction; Redrow has used semi-modular techniques with steel frames to produce affordable housing in the Midlands. The Housing Association sector seems streets ahead - for instance Hyde Housing Association has been using Buma units from Poland for its developments in south London, and Peabody Trust has been very active in using modular techniques. But in the UK most of the manufacturers are still cottage industries, with no real economies of scale. So modular housing doesn't, as yet, come in much cheaper than the built-on-site construction.
The most interesting name in this game is Ikea, which has started producing "flat-pack houses." Now one thing we do know about Ikea is that it has both the production and distribution capability to make this work. And it's also reaching saturation as a retailer, I'd think - I wonder whether someone in head office has set housing out as the new strategic growth direction?
Sunday 24 December 2006
Wednesday 20 December 2006
Risk perception vs real risk
I was intrigued to see that Invocas, a company dealing with insolvency, only had three practitioners on the staff when it floated on AIM. This has now increased to seven.
Good going, but I wonder why we are expected to feel sanguine about investing - with no management control and relatively little disclosure - in a business where the entire profit base rests on the effort of three individuals? This doesn't seem any more hopeful than investing in a dot com run by two guys in a garage.
But no one's talking about an 'insolvency practitioner bubble'...
Good going, but I wonder why we are expected to feel sanguine about investing - with no management control and relatively little disclosure - in a business where the entire profit base rests on the effort of three individuals? This doesn't seem any more hopeful than investing in a dot com run by two guys in a garage.
But no one's talking about an 'insolvency practitioner bubble'...
Tuesday 19 December 2006
Equity rools OK
Back in the dog days of the stock market, Boots shifted its pension fund into cash and bonds.
British Telecom stayed in equities.
Now the idea was that when you have long term liabilities such as pensioners - and you can forecast mortality rates, dates of retirement, entitlement, and so on - you should match them with long term assets. Bonds, according to the actuaries, are much easier to forecast than equities since they have a given rate of return to maturity.
Ahem. There are a number of things wrong with that argument. First, there is a risk of default on all corporate bonds and some government bonds. That needs to be allowed for. But secondly, and more importantly, bond prices are not static; they rise and fall in inverse correlation to the yield. There is therefore substantial risk in this market - as some purchasers of bond funds have found when they have indeed received their regular income, but seen their capital shrink.
And finally, of course, bond coupons never grow. Whereas if you buy equities, there is a reasonable expectation that dividends will be increased as the company improves its profitability.
It's that factor that should drive equity prices over the long term. Bond yields can only rise if prices fall - with an equity, both dividends and the share price should increase, if things go right.
So it is perhaps not a surprise that BT, having stayed in equities throughout the last few years, is slowly digging its way out of a pension fund deficit.
British Telecom stayed in equities.
Now the idea was that when you have long term liabilities such as pensioners - and you can forecast mortality rates, dates of retirement, entitlement, and so on - you should match them with long term assets. Bonds, according to the actuaries, are much easier to forecast than equities since they have a given rate of return to maturity.
Ahem. There are a number of things wrong with that argument. First, there is a risk of default on all corporate bonds and some government bonds. That needs to be allowed for. But secondly, and more importantly, bond prices are not static; they rise and fall in inverse correlation to the yield. There is therefore substantial risk in this market - as some purchasers of bond funds have found when they have indeed received their regular income, but seen their capital shrink.
And finally, of course, bond coupons never grow. Whereas if you buy equities, there is a reasonable expectation that dividends will be increased as the company improves its profitability.
It's that factor that should drive equity prices over the long term. Bond yields can only rise if prices fall - with an equity, both dividends and the share price should increase, if things go right.
So it is perhaps not a surprise that BT, having stayed in equities throughout the last few years, is slowly digging its way out of a pension fund deficit.
Thursday 14 December 2006
Property trends
Had an interesting visit to OPP Live last week - an exhibition focused on property professionals who want to network, rather than flogging overseas property to the public. Obviously, a quite different feel from a b2c exhibition.
One interesting feature was the prominence of online marketing at the event. Property portals, search marketing advisors, and software companies were much in evidence. We've seen a huge increase in the amount of media devoted to overseas properties - we've gone from 6 to over 30 magazines - and I suspect too that not all the portals will make it. But right now it's a fascinating area and it's interesting to watch as the smarter portals start to differentiate themselves, through specialisation, use of new media such as podcasting, or addition of specialised content.
Another interesting feature which the overseas property sector shares with the stock market was the search for the next big thing. Panama looks interesting - already sells well to US investors and is now looking for the UK buyer - and in Eastern Europe, Bulgaria may already be past it, with other opportunities emerging. It's a bit like looking for value in shares - investors are heading for riskier and riskier propositions as the price of more mature or just better researched shares heads up. There's nothing wrong with this - it's the way markets work; but at a certain point perhaps there's the worry that investors aren't completely au fait with the risks they're taking.
The market now is highly focused on development property, too. Of course there are good business reasons for this - it's easier to skill up staff on a single large development, easier to market, and there are fewer legal wrinkles selling a new build. But when I see a lot of development happening I do begin to worry about the supply/demand equation. What really interests me here is that there's currently no way to quantify this. Demand/supply data is entirely anecdotal - look out from the balcony of the ski resort apartment you're thinking about, and how many cranes can you see? That seems to be the case even in the UK. Wouldn't it be worth setting up a supply/demand index for Spain, or Bulgaria - total sales in the month against total new starts?
That's where the US market is way ahead of us, with the housing starts and completions numbers freely available and pretty widely reported. Though it still doesn't mean anyone has a clear idea of where the US real estate market is going...
One interesting feature was the prominence of online marketing at the event. Property portals, search marketing advisors, and software companies were much in evidence. We've seen a huge increase in the amount of media devoted to overseas properties - we've gone from 6 to over 30 magazines - and I suspect too that not all the portals will make it. But right now it's a fascinating area and it's interesting to watch as the smarter portals start to differentiate themselves, through specialisation, use of new media such as podcasting, or addition of specialised content.
Another interesting feature which the overseas property sector shares with the stock market was the search for the next big thing. Panama looks interesting - already sells well to US investors and is now looking for the UK buyer - and in Eastern Europe, Bulgaria may already be past it, with other opportunities emerging. It's a bit like looking for value in shares - investors are heading for riskier and riskier propositions as the price of more mature or just better researched shares heads up. There's nothing wrong with this - it's the way markets work; but at a certain point perhaps there's the worry that investors aren't completely au fait with the risks they're taking.
The market now is highly focused on development property, too. Of course there are good business reasons for this - it's easier to skill up staff on a single large development, easier to market, and there are fewer legal wrinkles selling a new build. But when I see a lot of development happening I do begin to worry about the supply/demand equation. What really interests me here is that there's currently no way to quantify this. Demand/supply data is entirely anecdotal - look out from the balcony of the ski resort apartment you're thinking about, and how many cranes can you see? That seems to be the case even in the UK. Wouldn't it be worth setting up a supply/demand index for Spain, or Bulgaria - total sales in the month against total new starts?
That's where the US market is way ahead of us, with the housing starts and completions numbers freely available and pretty widely reported. Though it still doesn't mean anyone has a clear idea of where the US real estate market is going...
Plus ça change...
Am I the only one to be totally underwhelmed by yesterday's announcement from Trinity Mirror?
No sale of the regional papers (en bloc). No sale of the national title. No demerger. No real change in strategy. All this accompanied by an 8% decline in advertising revenues. Only the sports papers will hit the auction block as a coherent business unit.
Never in the course of human history has so much time and effort (and money, and consultants) been wasted on such a total lack of change.
As for exactly why some of the regional titles, such as those in the south-east, are up for sale, but others (including Scotland, which saw a 3% fall in circulation) are not, eludes me. Perhaps simply because they fit some region-shaped holes in some of the other regional players' portfolios?
And remember, all of the last year has been spent deciding whether to sell the papers.
Now Trinity Mirror has the difficult bit to do - actually selling them.
A PER of 9 and a yield of 4.4% is telling us something. And I suspect it's not that the shares are cheap. This could so easily get worse before it gets better.
By the way, there's one quite intriguing nugget in the numbers. While advertising as a whole was down 8%, recruitment advertising was down 13%. That does not look particularly healthy for the consumer economy - or for house prices - and particularly not for recruitment companies.
No sale of the regional papers (en bloc). No sale of the national title. No demerger. No real change in strategy. All this accompanied by an 8% decline in advertising revenues. Only the sports papers will hit the auction block as a coherent business unit.
Never in the course of human history has so much time and effort (and money, and consultants) been wasted on such a total lack of change.
As for exactly why some of the regional titles, such as those in the south-east, are up for sale, but others (including Scotland, which saw a 3% fall in circulation) are not, eludes me. Perhaps simply because they fit some region-shaped holes in some of the other regional players' portfolios?
And remember, all of the last year has been spent deciding whether to sell the papers.
Now Trinity Mirror has the difficult bit to do - actually selling them.
A PER of 9 and a yield of 4.4% is telling us something. And I suspect it's not that the shares are cheap. This could so easily get worse before it gets better.
By the way, there's one quite intriguing nugget in the numbers. While advertising as a whole was down 8%, recruitment advertising was down 13%. That does not look particularly healthy for the consumer economy - or for house prices - and particularly not for recruitment companies.
Wednesday 6 December 2006
Telecoms - the start of something good
Further evidence that telecoms is beginning to climb back up again came from a chat with Alternative Networks this morning.
First of all, price erosion seems to have stabilised. Mobile prices in the past year fell around 5 to 15 percent, while fixed line declines have stabilised at about 5 percent. Consolidation in the industry appears to have limited the major suppliers' appetite for further price cuts.
Secondly, the CEO believes we're about to see upwards movement in ARPU. Currently, data devices such as the Blackberry have relatively low ARPU. But two things are happening;
1 - bandwidth is getting higher, and web site versioning for mobile devices (eg 'Ocado lite') are permitting more, quicker data access. What happened to video on the web once broadband arrived is going to happen to mobile internet use.
2 - new, converged devices such as the BlackBerry Pearl are becoming popular, and will lead to a market where dedicated data access is no longer the privilege of the executive classes (and/or the nerds).
That's a good story. I'm not sure I believe managing a telecoms company has yet become a soft option - Alternative Networks has had to do some really hard work, for instance, to reduce its churn - but it does look as if the worst is over.
And for those who're interested, Alternative Networks (AN.) is trading on about 11 times earnings, with a 2.2% forecast dividend yield. Hmm, it might as well be a housebuilder.... (see post below!)
First of all, price erosion seems to have stabilised. Mobile prices in the past year fell around 5 to 15 percent, while fixed line declines have stabilised at about 5 percent. Consolidation in the industry appears to have limited the major suppliers' appetite for further price cuts.
Secondly, the CEO believes we're about to see upwards movement in ARPU. Currently, data devices such as the Blackberry have relatively low ARPU. But two things are happening;
1 - bandwidth is getting higher, and web site versioning for mobile devices (eg 'Ocado lite') are permitting more, quicker data access. What happened to video on the web once broadband arrived is going to happen to mobile internet use.
2 - new, converged devices such as the BlackBerry Pearl are becoming popular, and will lead to a market where dedicated data access is no longer the privilege of the executive classes (and/or the nerds).
That's a good story. I'm not sure I believe managing a telecoms company has yet become a soft option - Alternative Networks has had to do some really hard work, for instance, to reduce its churn - but it does look as if the worst is over.
And for those who're interested, Alternative Networks (AN.) is trading on about 11 times earnings, with a 2.2% forecast dividend yield. Hmm, it might as well be a housebuilder.... (see post below!)
Housebuilders: no bargain?
UK housebuilders are selling at ten times earnings. Despite warnings that consumer debt, house prices, and high mortgage multiples are unsustainable, housebuilders have actually been rerated over the last year; last year they were selling at six or seven times earnings. And for a good number of years before that, the housing boom was accompanied by low PERs in the sector.
I rather wonder whether the PER multiples of housebuilders tend to be a contrary indicator of profits. I haven't actually run a datastream chart (I'd be very interested if anyone with more nous on those things could!) but it seems to me that when housing prices were really starting to move, around 1998-9, you could pick up housebuilders at about four or five times, and that continued to be the case. Share prices rose in line with earnings, but there wasn't a wholesale rerating. I've looked at Barratt, every time it had results from 2001 (I couldn't get really good data from before that):
Date Barratt Developments PER House price inflation
April 2001 8 +5%
September 2002 6 +15%
March 2003 5
October 2003 5 +25%
March 2004 5
October 2004 6 +15%
April 2005 5
September 2005 6 +5%
April 2006 7
October 2006 10 +10%
If you look at the years when house prices were really racing, we didn't see a rerating then. We're seeing it now. I wonder if this is a sucker rally?
Now at four or five times earnings, with a humongous yield and trading close to net asset value, housebuilders really were cheap in the early years of this decade. But at ten times earnings - and some are selling for more - they are not. Remember, land bank has to be bought, potentially locking in inventory at inflated prices. Many developers have in fact shown lower average house prices over the last year or so - despite the fact the market as a whole appears to be heading up. That's partly an effect of mix, but none the less it's a negative indicator for margins (which were rising strongly in the early part of the period this table covers) and profits.
What else can you get for ten times earnings? Well, let's look around... Touchstone (TSE) is a client of mine. It's a fine little computer services business which has marked out a niche for itself in Microsoft Business Solutions - and done really well out of being early into that market, particularly with Axapta (as was). It's growing, it pays a good dividend, and it's only on about 10x earnings.
I rather wonder whether the PER multiples of housebuilders tend to be a contrary indicator of profits. I haven't actually run a datastream chart (I'd be very interested if anyone with more nous on those things could!) but it seems to me that when housing prices were really starting to move, around 1998-9, you could pick up housebuilders at about four or five times, and that continued to be the case. Share prices rose in line with earnings, but there wasn't a wholesale rerating. I've looked at Barratt, every time it had results from 2001 (I couldn't get really good data from before that):
Date Barratt Developments PER House price inflation
April 2001 8 +5%
September 2002 6 +15%
March 2003 5
October 2003 5 +25%
March 2004 5
October 2004 6 +15%
April 2005 5
September 2005 6 +5%
April 2006 7
October 2006 10 +10%
If you look at the years when house prices were really racing, we didn't see a rerating then. We're seeing it now. I wonder if this is a sucker rally?
Now at four or five times earnings, with a humongous yield and trading close to net asset value, housebuilders really were cheap in the early years of this decade. But at ten times earnings - and some are selling for more - they are not. Remember, land bank has to be bought, potentially locking in inventory at inflated prices. Many developers have in fact shown lower average house prices over the last year or so - despite the fact the market as a whole appears to be heading up. That's partly an effect of mix, but none the less it's a negative indicator for margins (which were rising strongly in the early part of the period this table covers) and profits.
What else can you get for ten times earnings? Well, let's look around... Touchstone (TSE) is a client of mine. It's a fine little computer services business which has marked out a niche for itself in Microsoft Business Solutions - and done really well out of being early into that market, particularly with Axapta (as was). It's growing, it pays a good dividend, and it's only on about 10x earnings.
Fun and gaming
Apparently Stream has changed its business model. It used to provide horoscopes and psychic advice on mobile phones. Mobile content is dead, allegedly.
(Actually what I think happened is that mobile content became mature very quickly. And 'growth' management strategies can't survive on thin margins. My suspicion is that a consolidator with a ruthless concentration on costs could probably do very well indeed by buying up mobile content companies and cutting out their overheads.)
Stream is now going to change its name to NetPlay TV, and acquire Vegas247, which runs an interactive roulette channel on Sky.
What's behind the move? Internet gambling stocks have been hit hard by US legislation - but outside the US, there's still substantial growth to be had. Sportingbet, for instance, recently reported over 50% growth in bets placedby customers in its fiscal Q1. Betinternet has finally broken into profit with its pari-mutuel business.
The real key to the move is that Vegas247 has a UK gaming licence. No bets from the US so no dodgy legal position to worry about. No likelihood of executives being arrested at the airport.
And in this connection what I find extremely interesting is that one gambling stock which has done extremely well over the past few months - in contrast to the sector as a whole. Stand up William Hill. I'd love to present this as a 'revenge of the bricks' story, but it's really a story about the company's relative lack of exposure to internet gaming, and lower valuation.
None the less I do wonder whether gaming will start seeing some of the 'back to bricks' trends that have been evident in the retail sector. After all it's an excellent way to build a brand. And whereas the web is relatively unregulated and still has low barriers to entry, casinos and betting shops are tightly regulated and likely to remain so, despite the government's intention to liberalise slightly.
So, is Stream right to go into the world of television betting? I don't know. Sometimes these channels work, and sometimes they don't. The devil here can be in the detail - Sky just needs to reorganise its channel listings, and that can put the kybosh on your business, as Cellcast found out to its cost. But it certainly seems that Stream, or NetPlay TV as it will soon be, has found an interesting new direction in life.
(Actually what I think happened is that mobile content became mature very quickly. And 'growth' management strategies can't survive on thin margins. My suspicion is that a consolidator with a ruthless concentration on costs could probably do very well indeed by buying up mobile content companies and cutting out their overheads.)
Stream is now going to change its name to NetPlay TV, and acquire Vegas247, which runs an interactive roulette channel on Sky.
What's behind the move? Internet gambling stocks have been hit hard by US legislation - but outside the US, there's still substantial growth to be had. Sportingbet, for instance, recently reported over 50% growth in bets placedby customers in its fiscal Q1. Betinternet has finally broken into profit with its pari-mutuel business.
The real key to the move is that Vegas247 has a UK gaming licence. No bets from the US so no dodgy legal position to worry about. No likelihood of executives being arrested at the airport.
And in this connection what I find extremely interesting is that one gambling stock which has done extremely well over the past few months - in contrast to the sector as a whole. Stand up William Hill. I'd love to present this as a 'revenge of the bricks' story, but it's really a story about the company's relative lack of exposure to internet gaming, and lower valuation.
None the less I do wonder whether gaming will start seeing some of the 'back to bricks' trends that have been evident in the retail sector. After all it's an excellent way to build a brand. And whereas the web is relatively unregulated and still has low barriers to entry, casinos and betting shops are tightly regulated and likely to remain so, despite the government's intention to liberalise slightly.
So, is Stream right to go into the world of television betting? I don't know. Sometimes these channels work, and sometimes they don't. The devil here can be in the detail - Sky just needs to reorganise its channel listings, and that can put the kybosh on your business, as Cellcast found out to its cost. But it certainly seems that Stream, or NetPlay TV as it will soon be, has found an interesting new direction in life.
Monday 4 December 2006
Viral video
BT has just launched a new service offering both Freeview and a selection of movies with its broadband package. This looks kind of interesting. It's obviously a move on BSkyB - about time, too, since with its acquisition of Easynet BSKyB had started staking out some of BT's territory. It also looks like a canny move against Car Phone Warehouse, which can now offer phones and broadband but not entertainment.
However I think these guys may be missing something. What's been really intriguing about YouTube has been the success of quirky shorts - Grumpy Old Man, a fantastic three minutes of Garrincha (never heard of him? Pele, to the power of five, on speed!), great own goals. These things get links emailed, they get aggregated on other sites, and even the Guardian got into the game a few days ago when one of its sports journalists blogged a few great YouTube selections.
This kind of snackable content is where a lot of the money is going to be. And who owns that? er... Google, which seems to see where the money's going in media, particularly in advertising, with 20/20 foresight.
We'll have to see whether BT can make use of this kind of content. But for all its good words about user-generated content I rather feel BT, like BSkyB, has still got an old style broadcasting model - one to many, however many channels - and it's not 'native to the net'.
However I think these guys may be missing something. What's been really intriguing about YouTube has been the success of quirky shorts - Grumpy Old Man, a fantastic three minutes of Garrincha (never heard of him? Pele, to the power of five, on speed!), great own goals. These things get links emailed, they get aggregated on other sites, and even the Guardian got into the game a few days ago when one of its sports journalists blogged a few great YouTube selections.
This kind of snackable content is where a lot of the money is going to be. And who owns that? er... Google, which seems to see where the money's going in media, particularly in advertising, with 20/20 foresight.
We'll have to see whether BT can make use of this kind of content. But for all its good words about user-generated content I rather feel BT, like BSkyB, has still got an old style broadcasting model - one to many, however many channels - and it's not 'native to the net'.
The straw to break the camel's back?
The most interesting statistic I've seen for a while is that buy-to-let landlords now account for 50 percent of repossessions.
To be cynical, perhaps these guys feel they can just walk away - after all they don't actually live in the house. But it suggests that some of the people who have bought into thin yields over the past few years are now doing their sums - and potential capital gains don't justify the gap between the rental yield and the mortgage cost.
I suspect it's the buy-to-let market that might set this housing market off downwards. Last time round, in the late 1980s, it was the removal of MIRAS that seems to have done it - leading to a sudden splurge of buying and an equally sudden absence of activity, and then, as prices started down, repossession of first-time buyers who had been too stretched.
There's always one straw that breaks the camel's back. Could this be it?
To be cynical, perhaps these guys feel they can just walk away - after all they don't actually live in the house. But it suggests that some of the people who have bought into thin yields over the past few years are now doing their sums - and potential capital gains don't justify the gap between the rental yield and the mortgage cost.
I suspect it's the buy-to-let market that might set this housing market off downwards. Last time round, in the late 1980s, it was the removal of MIRAS that seems to have done it - leading to a sudden splurge of buying and an equally sudden absence of activity, and then, as prices started down, repossession of first-time buyers who had been too stretched.
There's always one straw that breaks the camel's back. Could this be it?
Thursday 30 November 2006
Telecom M&A
Yet another telecoms industry bid today as Redstone Telecom takes out IDN Telecom. Redstone had already taken on Symphony and Tolerant so this is their third strike.
And behold; after a lousy start to 2006, even Vodafone and BT are in favour now, with share price gains since the summer of 30-40%.
We're also seeing real convergence between fixed and wireless. Redstone's interims stress the acquisition of mobile as well as fixed business, and even Vodafone is now moving into the fixed world. Then you have the strange emergence of Car Phone Warehouse as a telecoms supplier rather than a mobile reseller. Convergence is happening; what intrigues me is that it's happening about five years after everybody thought it would.
The same goes for triple play. It was BSkyB's acquisition of Easynet that kicked this off - and it is still not completely in place, with most smaller ISPs unable to offer the third piece of the jigsaw, TV.
That suggests the market is just recognising the fact that telecoms companies are starting to extract the value from their operations. The typical network fixation of telecoms execs seems to have gone - instead of which they're looking at what their customers actually care enough about to pay for.
And behold; after a lousy start to 2006, even Vodafone and BT are in favour now, with share price gains since the summer of 30-40%.
We're also seeing real convergence between fixed and wireless. Redstone's interims stress the acquisition of mobile as well as fixed business, and even Vodafone is now moving into the fixed world. Then you have the strange emergence of Car Phone Warehouse as a telecoms supplier rather than a mobile reseller. Convergence is happening; what intrigues me is that it's happening about five years after everybody thought it would.
The same goes for triple play. It was BSkyB's acquisition of Easynet that kicked this off - and it is still not completely in place, with most smaller ISPs unable to offer the third piece of the jigsaw, TV.
That suggests the market is just recognising the fact that telecoms companies are starting to extract the value from their operations. The typical network fixation of telecoms execs seems to have gone - instead of which they're looking at what their customers actually care enough about to pay for.
Wednesday 29 November 2006
Some advice for financial PR firms
I'm getting fed up with financial PR firms. Not all of them - but an awful lot. They keep doing stupid things.
- Emails which say "Please read this announcement." No mention of what the announcement is. For all I know the piddling little mobile phone repair firm might just have bought Microsoft and Google... but if you don't tell me, can I be bothered to read the announcement? It hardly takes much imagination to put a quick summary in the subject line. "Piddling PLC buys Google" or "Piddling PLC interim results".
- Even better if you could be bothered to put an executive summary in the body of the email as well as the full attachment.
- Attachments over 10 megabytes. Do these guys realise that not everyone has an unlimited email account? That I might be accessing my account via mobile, or over a dial up line? That I am getting TWENTY OR THIRTY of these things a day? Do you really need fifteen photographs? Have you compressed the data? I can't believe that a corporate results presentation needs to be this big. In fact, I'd ask some of these agencies: did you bother to look at how big the file is, before you sent it?
Miniaturisation beneficiaries
I spoke to Sarantel yesterday on their latest results. They've been hit by a major client not delivering the volumes it promised, and have had to retrench.
But they've also now got new deals for their antennas with Hewlett Packard and TomTom. The HP deal in particular should help them get back on track, as they now have better visibility - they're supplying the end users, not just another OEM.
What strikes me as interesting about Sarantel though is that it's a beneficiary of the trend to miniaturisation. Management believes patch antennas are reaching their physical limits, and face unacceptable performance degradation from here on for every millimetre taken out.
'Slimline' TomTom currently means 14mm thick. Sarantel are looking at products only 10mm thick and the size of a credit card.
So there's a second Moore's law at play. Not only do we see the amount of memory/processing power per pound increasing, but at the same time a commensurate decrease in both size and (importantly) power requirements.
But they've also now got new deals for their antennas with Hewlett Packard and TomTom. The HP deal in particular should help them get back on track, as they now have better visibility - they're supplying the end users, not just another OEM.
What strikes me as interesting about Sarantel though is that it's a beneficiary of the trend to miniaturisation. Management believes patch antennas are reaching their physical limits, and face unacceptable performance degradation from here on for every millimetre taken out.
'Slimline' TomTom currently means 14mm thick. Sarantel are looking at products only 10mm thick and the size of a credit card.
So there's a second Moore's law at play. Not only do we see the amount of memory/processing power per pound increasing, but at the same time a commensurate decrease in both size and (importantly) power requirements.
Monday 27 November 2006
A dumb investment?
There's a piece in the Evening Standard 'Homes and Property' supplement promoting Corby as a great place to buy a house.
I'm not convinced. Let's take a look at how it really stacks up.
"An hour's commute from London." This is hopeful. Corby doesn't actually have a station. Commuters either have to drive, or take a shuttle bus to Kettering. From Kettering, services are every half an hour - just about an acceptable commuter frequency, but not more.
"There are plans for thousands of new homes." Are the Evening Standard's journalists completely economically illiterate? The fact that supply is increasing is generally considered to have a downwards impact on prices, but here - as so often with coverage of the Thames Gateway - developers' PRs seem to have convinced them that increased supply is a reason to buy!
Now let's look at what the economy is like. Corby suffered badly in the 1980s after the steelworks closed. It is now seeing new jobs. But they're in food processing and distribution. Might I point out that these are not trades which employ lots of well remunerated young professionals? Many of these factories are probably paying the majority of their workers close to minimum wage. That equates to about £11,000 a year. On that, even applying five times income, and assuming you've got a £10,000 deposit, you'll be able to afford £65k for a property. Needless to say, none of the properties featured in the article are selling anywhere near that level.
I do wonder if buy to let investors are going to head for Corby on the basis of this article. There just isn't any underpinning to the argument. It looks as if someone got hold of a load of press releases and stuck them together, without asking what will drive prices up.
I'm not convinced. Let's take a look at how it really stacks up.
"An hour's commute from London." This is hopeful. Corby doesn't actually have a station. Commuters either have to drive, or take a shuttle bus to Kettering. From Kettering, services are every half an hour - just about an acceptable commuter frequency, but not more.
"There are plans for thousands of new homes." Are the Evening Standard's journalists completely economically illiterate? The fact that supply is increasing is generally considered to have a downwards impact on prices, but here - as so often with coverage of the Thames Gateway - developers' PRs seem to have convinced them that increased supply is a reason to buy!
Now let's look at what the economy is like. Corby suffered badly in the 1980s after the steelworks closed. It is now seeing new jobs. But they're in food processing and distribution. Might I point out that these are not trades which employ lots of well remunerated young professionals? Many of these factories are probably paying the majority of their workers close to minimum wage. That equates to about £11,000 a year. On that, even applying five times income, and assuming you've got a £10,000 deposit, you'll be able to afford £65k for a property. Needless to say, none of the properties featured in the article are selling anywhere near that level.
I do wonder if buy to let investors are going to head for Corby on the basis of this article. There just isn't any underpinning to the argument. It looks as if someone got hold of a load of press releases and stuck them together, without asking what will drive prices up.
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