Tech Crunch points to a piece in the NYT on the loss of value of financial companies between October 9, 2007 and September 12, 2008, or roughly 11 months. Reading it, you can’t help but shake your head:
Citigroup: $236.7 billion to $97.8 billion.
Bank of America: $236.5 billion to $150.2 billion.
AIG: $179.8 billion to $32.3 billion
Goldman Sachs: $97.7 billion to $61.3 billion
American Express: $74.8 billion to $45 billion.
Morgan Stanley: $73.1 billion to $41.1 billion.
Fannie Mae: $64.8 billion to $700 million.
Merrill Lynch: $63.9 billion to $24.2 billion
Freddie Mac: $41.5 billion to $300 million.
Lehman Brothers: $34.4 billion to $2.5 billion.
Washington Mutual: $31.1 billion to $2.9 billion
In percentage terms, it is brutal:
Now the crazy part is that the broader stock market has not really woken up to this, and that spells bad news for the stock market. Bear in mind, much like the auto industry’s indirect impact on the economy is exponentially larger than its direct impact, the financial sector is pivotal to the economy. I’d say it is the industry with the greatest multiplier effect, and this effect is much sharper in downturns than upticks in growth. I remain convinced that some markets (be it sectors or geographies) will be less impacted, however, the fact that it is financial firms that are cratering, due to exposure to mortgages, is alarming. It’s one thing if financials crash due to risk mismanagement, but when it’s over mortgage risk mismanagement, expect chaos of gargantuan proportions.
Recall that in 2000, the Nasdaq imploded and took down the economy with it, this time around, the mortgage market crashed, and since these are not priced in real times, the shakeout is much less instantaneous, transparent, and seamless. I don’t think we’re feeling the full effects just yet. Don’t forget, these banks work with companies by lending and safeguarding their money, as such, layoffs as HP, eBay etc. are just the tip of the iceberg.
Nouriel Roubini, an economic guru I came across on Paul Kedrosky’s blog, has been apparently right throughout this tornado of crap and is pretty adamant that both Goldman Sachs and Morgan Stanley are next. Having studied finance, I must say, once he lays down his rationale as to why their business models are wrong, you tend to understand that indeed, they are doomed. This is why, to quote William Larkin, fixed income manager at Cabot Money Management in Salem, Massachusetts, “Goldman Sachs and Morgan Stanley are lining up dancing partners. They don’t want to be … this week’s victim.”
Sad, but true.
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WatchMojo NewsletterInteresting observation from SAI on comScore’s latest data:
comScore says that major video players like Viacom (VIA), Comcast (CMCSA), Veoh, Disney (DIS) and Yahoo (YHOO) generated fewer views in July than they did the year before. It’s possible that the measurement company’s data is off, which is what Veoh say: It insists that it has grown in the past year and that comScore doesn’t accurately measure the site. (They say the same thing about Nielsen Netratings). But if comScore’s data is at least directionally correct, it’s not a pretty picture:
Fox Interactive: 11%
Yahoo: -31%
Viacom: -12%
Disney: -2%
CBS: 95%
ESPN: -12%
ABC: 156%
Comcast: -34%
DailyMotion: 45%
Veoh: -47%
NBCU: 4%
Now, comScore’s data is occasionally accurate, oftentimes a joke (all measurement services are guilty of that, to be fair; comScore is no better or worse in that scale). However, the underlying premise that YouTube is gaining market share full speed ahead at the expense of these laggards is not wrong. Look at this graph, again courtesy of comScore’s data, but created by SAI:
That’s just for the views part, what about the overall business? I think, as I outlined earlier this year, that there will be a MASSIVE shakeout in the aggregator space. There are way too many out there, with too little to differentiate one another, and thanks to services like TubeMogul, there is not even much of differentiation by way of content… this is where a service like Hulu - backed and owned by NBC and News Corp. - might remain in growth mode, but for all intents and purpose, you will see a shakedown.
Biased as I always am, this is a welcome sign for content owners, however… because less noise coming out of the file sharing sites - who house a lot of user-generated crap - means one thing: good content will rise to the surface.
Of course, you might say: “but Ash, doesn’t YouTube - the world’s biggest video site - house more UGCrap than anyone else?” True, young Jedi… but the difference is that YouTube is clearly trying to showcase professional content and become a friend of traditional media (content owners)… this radical shift in business strategy might not be seen overnight, but as a content provider to YouTube, it’s clearly something that one cannot be unaware of.
PLAY
