Want to read Slashdot from your mobile device? Point it at m.slashdot.org and keep reading!


Forgot your password?
DEAL: For $25 - Add A Second Phone Number To Your Smartphone for life! Use promo code SLASHDOT25. Also, Slashdot's Facebook page has a chat bot now. Message it for stories and more. Check out the new SourceForge HTML5 Internet speed test! ×

Comment Re:Reinvesting in the business (Score 1) 110

This is not true -- at least not entirely. Amazon has increased investment in R&D significantly. Most people would consider R&D an investment, but unlike PP&E GAAP generally treats R&D as an expense (only a very limited set of software-related R&D can be capitalized). Over the past two years, for example, Amazon's expenditure on R&D has increased by 108%, compared to an increase in SG&A of 77%. Gross margins have actually risen over the past two years, from 23.7% to 28.6%, which belies the notion that Amazon is trading profit margin for market share.

Comment Re:By Country (Score 1) 199

"1) Not all countries have an equal need for aircraft carriers, it depends on the importance of sea lanes and force projection" Correct. And to this point, it should be noted the United States has the largest EEZ in the world to protect.

Comment Re:Might want to tighten the bolts on those sabers (Score 2) 199

In addition to Yalius' point, which is entirely accurate, international law expressly does not recognize artificial islands or structures in calculating territorial waters or EEZs. If it did, every nation would be scrambling to build oil rigs in the middle of nowhere to claim the entire ocean surface. On the other hand, if a new natural island is created through volcanic activity, that is recognized as expanding territorial waters and EEZs under international law.

Comment Re:Full Retard Mode Activate! (Score 1) 220

Nothing relating to international law is clear cut. In this case, you forgot Article XXI of GATT, "Security Exceptions."

"Nothing in this Agreement shall be construed
(a) to require any contracting party to furnish any information the disclosure of which it considers contrary to its essential security interests; or
(b) to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests
(i) relating to fissionable materials or the materials from which they are derived;
(ii) relating to the traffic in arms, ammunition and implements of war and to such traffic in other goods and materials as is carried on directly or indirectly for the purpose of supplying a military establishment;
(iii) taken in time of war or other emergency in international relations; or
(c) to prevent any contracting party from taking any action in pursuance of its obligations under the United Nations Charter for the maintenance of international peace and security."

The great thing about this article is it's self-judging -- in particular, XXI(b)(ii) can be interpreted to apply to almost anything. Cf. http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2079608.

Comment Re:Why do they use letters like "AAA"? (Score 5, Interesting) 1239

Two answers to your question.

First, history plays a key role. The credit rating system started out this way (with letter ratings and modifiers) decades ago, and since then so much national legislation, international regulations, and corporate policies have been crafted around the existing system that it'd be very costly to change. For example, BBB- or higher is the legal definition of "investment-grade", and many financial institutions (insurance companies, pension funds, etc.) are legally barred from investing more than a certain percentage of assets under management in non-investment-grade securities. Similarly, Basel III and national reserve requirements assign different risk weightings to different credit rating levels -- AAA and AA may have a zero weight, for example (no capital is required to be held against the possibility of default for these classes of securities), while high-yield investments below C may have a 50% risk weight.

There actually is one rating agency that does use a 0-100% scale, but their scale is actually more difficult for the people who actually use the ratings (fund managers, policymakers, chief risk officers, etc.) to understand since it does not correlate as directly to existing regulatory and legal definitions.

Second, there actually are loss-given-default ratings like you describe, but they are assigned to specific securities rather than to companies as a whole. In fact, there are actually many different types of credit ratings. The one you hear most often is the long-term corporate issuer (or sovereign issuer) credit rating, but there are also short-term ratings, foreign-issuer ratings, loss-given-default ratings, etc.

A company would typically have many of these ratings simultaneously -- e.g. a Canadian company may have an AA rating for CAD-denominated short-term bonds, a A rating for Canadian-dollar-denominated long-term bonds, and a BBB- rating for US-dollar-denominated long-term bonds. Moreover, although the company's US-dollar-denominated long-term bonds issued last week were rated only BBB-, they have a loss-given-default of only 1% because they are structurally senior in the capital structure to the rest of the company's debt, whereas the loss-given-default rating for its AA-rated short-term debt issued yesterday may actually have a loss-given-default rating of 85% because it is subordinated to ten other bonds.

Comment Re:Sucide rate? (Score 1) 537

This is precisely spot on. I've followed the story since it's inception and am not convinced. First, Foxconn employs nearly a million people in China. Statistically, the fact that they've only had 20-30 suicides so far is actually impressive.

Second, one significant cause for the rash of suicides was that Foxconn, acting under pressure from Apple, actually compensated the first suicidee's family with an enormous compensation package, equal to 5-10 years worth of wages. Shortly thereafter, twelve more workers committed suicide, with one of them leaving behind a suicide note to his family along the lines of "at least now, with the money you will be able to live well and be happy".

I think two lessons follow from this. First, the press should always be treated with a degree of skepticism. Second, compensating the families of suicide victims has negative secondary consequences that must be considered.

Comment Re:Why predict +4 years? (Score 2) 377

From having worked with similar data and consulted companies that purchase similar data, I can tell you that no one in the business seriously relies on IDC's (and Datamonitor, iSuppli, DisplaySearch, etc.'s) precise long-range forecasts at face value. However, these forecasts are still developed for several reasons.

1) Firms have to take a long-term view with regards to certain investments. I don't know this particular business well-enough, but e.g. firms may have to make go-no-go decisions on expanding existing manufacturing capacity or breaking ground on new factories. These could easily amount to $300mm decisions, which require some idea of the long-term growth trend. However, you don't need that much precision in these long-term forecasts -- typically for long-term forecasts like this, corporate strategy teams would be interested primarily in the overall trend and the order-of-magnitude only (e.g. will the market be $300M in 5 years? $3B? or just $30M?). Most large firms that use this data will have internal strategy teams developing similar forecasts based on internal sales data (which IDC will rarely have access to, and have to estimate), their own corporate intelligence (competitor channel checks, etc.), data on competitors' manufacturing capacity build-outs, etc. to provide a sanity-check, and they are aware that any data in the tech industry past 2-3 years out is (at best) useful for order-of-magnitude estimates only.

2) Even if this particular industry doesn't rely as much on long-term forecasts (e.g. I don't see why a factory churning out Android phones can't be quickly reconfigured to churn out WP7 phones), these data providers typically have long-term contracts that require them to provide forecasts out X years for Y number of product categories, to a Z level of detail. So if they're providing 5-year forecasts for semiconductors or LCD demand by manufacturer, for example (very reasonable considering the large capital investments and high retooling costs in those sectors), for the sake of consistency they'll also develop 5-year forecasts for smartphones by operating system. Similarly, mobile phone manufacturers will want at least a 5-year forecast for the overall smartphone market (to know how much total smartphone capacity to build out), and for the sake of consistency they'll also provide a breakdown out to that 5-year period.

In short, no one who really works with the data needs the level of precision implied by the article, but to generate any forecast you need some quantitative model that will provide a "best" estimate, so that's the estimate these firms are reporting. The fact that error bars get (exponentially) larger the farther out you go is already well-understood by any serious user.

Comment Re:Absence of Evidence (Score 2) 807

Instead of paraphrasing freely, I encourage you to read Lomborg's actual response. He makes a more nuanced (and scholarly) argument than you suggest, and at only 27 pages is well worth the read: http://www.lomborg.com/dyn/files/basic_items/118-file/BL%20reply%20to%20Howard%20Friel.pdf

On page 13 it addresses the point you raised. I've quoted it below for your convenience, but in short the number was calculated directly from a peer-reviewed study, which Friel misunderstood or overlooked in his review of the text.

"The only peer-reviewed study to calculate all extra heat deaths and avoided cold deaths globally shows that the number of avoided cold deaths strongly outweigh the extra heat deaths. This study, (Bosello, Roson, & Tol, 2006), shows that although we are likely to see about 400,000 more heat deaths because of global warming by 2050, we will likely see about 1.8 million fewer cold deaths. Moreover, this effect will persist until at least 2200: 'The first complete survey for the world was published in 2006, and what it shows us very clearly is that climate change will not cause massive disruptions or huge death tolls. Actually, the direct impact of climate change in 2050 will mean fewer dead, and not by a small amount. In total, about 1.4 million people will be saved each year, due to more than 1.7 million fewer deaths from cardiovascular diseases and 365,000 more deaths from respiratory disorders.'"

Comment Re:Seriously? (Score 1) 926

No problem, glad to help! I find the whole intelligence fiasco on Iraq fascinating in being a completely unavoidable failure since the overwhelming bulk of both evidence and opinion available at the time really did point towards the presence of chem/bio weapons in Iraq. (The evidence and opinion was much less settled on nuclear, of course, as INR's alternative view clearly shows).

Comment Re:Seriously? (Score 1) 926

Easy enough. If you're familiar with National Intelligence Estimates, you will know they embody the consensus opinion of the US intelligence community (specifically, all 15 agencies must agree -- or at least agree not to disagree -- for an estimate to make it into a NIE). Here is the Key Judgments section (essentially the Executive Summary) of the declassified October 2002 NIE. I've read the whole thing and it's not that long (~50-60 pages if I remember?); I'm sure you could find it somewhere yourself. http://www.fas.org/irp/cia/product/iraq-wmd.html The opening line of the Key Judgments is: "We judge that Iraq has continued its weapons of mass destruction (WMD) programs in defiance of UN resolutions and restrictions. Baghdad has chemical and biological weapons as well as missiles with ranges in excess of UN restrictions; if left unchecked, it probably will have a nuclear weapon during this decade." At the bottom is a table with confidence intervals, and the statement "Iraq possesses proscribed chemical and biological weapons and missiles" is marked as high confidence, which is as good as it gets in terms of a NIE. You will also see the only alternative view, that of the State Department's INR (which along with the US Air Force has among the best analysts of the 15 agencies), does not contest that Iraq has proscribed stockpiles of chemical and biological weapons; it only disagrees with regards to nuclear weapons. In short: yes, the US intelligence community was unanimous that Iraq possess stockpiles of WMD.

Comment Re:Seriously? (Score 2, Funny) 926

"No one with a brain and access to the internet really believed that Iraq had a stockpile of WMD." This is a lie, unless you want to define "with a brain" liberally. Nearly the entire US intelligence community, the overwhelming majority of US policymakers, the overwhelming majority of US academics studying the topic, the overwhelming majority of the US general population, and the overwhelming majority of our foreign intelligence partners all considered it likely that Iraq had WMD at the time. In fact, this is used in the international relations literature as a classic example of unavoidable groupthink -- even if the US intelligence community had gone to the outside community to get second opinions, they would have inevitably reached the exact same conclusions.

Slashdot Top Deals

"I'm not a god, I was misquoted." -- Lister, Red Dwarf