Readings: Solar, Terra Firma vs. Citi, Dividend Recaps, Facebook + Bing, Management Consulting

Silicon Valley’s Solar Innovators Retool to Catch up to China: Selling energy (a commodity) is all about price, which means in order to turn a profit in a competitive market when prices are driven down, one has to be able to produce at the lowest cost (or at least within a competitive low-cost band).  Competing with China’s subsidies, cheap labor, scale advantages, and not to mention depressed currency, is a hell of a battle.  I’m glad that I didn’t pick this fight at Solyndra with $1B riding on it.  But then again, as a U.S. tax payer, I guess I do have an interest in this fight by promising to lend Solyndra  $1.74 ($535M loan guarantee / 307M U.S. Pop.), so I do have a stake in this fight.  We better use technology to close the cost advantage, it’s our only hope.

Terra Firma, Citi in Spat over EMI: Wow.  This is an ugly tussle between a PE firm with buyer’s remorse and a bank double-siding a deal.  Kudos to Citi for a job well done; Terra Firma should just fess up to it’s mistake (but then again, if I were Terra Firma, I would be fighting tooth and nail not to be stuck holding the bag on this one).  Frankly, admitting it’s 20/20 hindsight, I don’t think this is an appropriate company for an LBO.  The industry is in serious decline due to a disruptive technology shift and the cash flows are not stable.

Dividend Rock: Firms Reward Buyout Bosses: The good (or should I say bad) ol’ dividend recap is on the rise.  I understand that PE investors need to make a return, so I can’t fault their incentive, but the dividend recap seems like a lousy route to return.  I may be a little jaded on this topic because I had a client get tipped into bankruptcy via a dividend recap enacted by its PE investor.  The PE Firm took its investment off the table and soon after the company hit hard times; instead of sticking around to fight, the PE firm walked away from the company, choosing to let it burn because it had no more skin in the game after the dividend recap.

Facebook, Microsoft Deepen Search Ties: My initial reaction was apprehension, but the more I think about it, I like the idea of integrating Facebook data (i.e. “likes”) into its search results.  For example, lets say I’m searching for a winery to visit in Napa and I type “Napa + Good Winery” into the search bar.  Today, I get some strangers opinion on a very subjective topic.  Tomorrow, after the Facebook integration, the search results can return the opinion of my friends (who may or may not be wine aficionados).  This way, I can solicit the input of my friends without having to bug them.

Heeding Their Own Advice, Consulting Firms Head East: Even consulting firms have caught the emerging market fever. Interesting.