I Have a Story

[This post first published in 2014]

East San Jose, CA -- Thanksgiving

I HAVE A STORY. I don't like Thanksgiving. I don't like turkey, and while I like pumpkin pie, eating an entire pie in one sitting isn't a great feeling. So I go out for pho in East San Jose, and afterwards, a nicely dressed 75 years old man (I'm guessing the age, b/c it's hard to tell the age of black adults) with a cane asks me, "Do you know where the Alum Rock station is?"

Me: "The VTA? No, but let me look it up on Google Maps. You're going to walk there? [He nods] Well, it's 35 minutes."

Him: That's fine.

Me: I'll take you there.

Him: Ok.

[Talking in car]

Me: What do you do?

Him: I'm ex-military.

Me: Which branch?

Him: Marine Corps.

Me: Were you stationed overseas?

Him: [chuckles] Yeah. Southeast Asia.

Me: I'm guessing Vietnam.

Him: Two tours.

Me: [not sure what to say] You know, most of what I know about that, b/c of my age, is from movies and documentaries.

Him: [silence]

Me: [changing subject] You like the restaurants around here?

Him: Yeah, but they can't cook as well as me.

Me: Oh yeah? What's your specialty?

Him: Everything!

[We somehow end up at a dead end. I decide I'll just take him to his destination.]

Me: You got kids?

Him: 7 kids. [He lists all their names and states they live in] One's a cook, youngest one's out here, she's not sure what she wants to do, and then [voice becomes exasperated] there's my other son. Every family gotta have an outlaw. He did 6 months in jail.

[We arrive at Veteran's Housing in East San Jose, near James Lick High School. I drop him off right at the door. We exchange goodbyes. Waiting outside and enjoying the night air is a man in a wheelchair with no legs.]

END SCENE.

Los Gatos, CA -- North Dakota

I HAVE A STORY. I visited a Medicare-funded physical rehab clinic. I saw an older lady with a walker outside on the sidewalk and asked directions to the entrance. She asked me about the room number and then said, "I'll walk with you if you like." I said, "Sure."

Her: I've been here for 17 years. Who are you visiting? I had a brain aneurysm, and I've been living here since.

Me: Are you originally from here? What caused the aneurysm?

Her: They don't know, but they think it's genetic. I came here from North Dakota. I guess you can tell by my accent. [giggles]

Me: Sounds like Minne-so-ta.

Her: They always exaggerate it in movies. We don't talk quite that bad! And we don't say, "Oooh" at the end of every sentence. [imitates exaggerated accent][Stops, checks walkie talkie, confirms something with the speaker]

Me: You ever miss North Dakota?

Her: My friends are here. I've gotten used to it. But when people get old, they get mental issues. I had someone say he was a terrorist and he threatened to kill me. But he was asking me a question! I was just responding to his question! [smiles]

[We walk inside, she reaches up and touches the top of a low hanging ceiling.]

Her: You've got to watch out for this. Some people have hit their heads. Oh, is that your friend's room? How do you pronounce the name?

END SCENE.

Sunnyvale, CA -- Wrestling

I HAVE A STORY. I have a Groupon for $25 for sushi. I go in after I have coffee nearby, and the owner tells me, you need to have 2 ppl. I tell him it's my first time, and whether I bring two ppl or just myself, I'm only going to order 2 rolls. He argues with me. I say 2 ppl isn't in the requirements section (though it's in the title "Sushi for 2"). And logically, doesn't he want me to try the sushi and let people know if it's any good? He says it has to be 2 ppl. Even though we're going to order 2 rolls either way? Apparently, yes. I tell him he's not being logical, and he tells me I'm not being logical. I write a slightly negative Yelp check-in comment.

I walk back to the coffeeshop and ask a random high school guy to come have sushi with me for free. He's with two girls, but he's done studying and comes with me. We sit down, and some idiot waitress comes by and asks how many we are. I say "Two." (The record is silent as to whether I add a large smirk.) The girls text the guy, telling him they think it's "sketchy." He says everything's cool...but it gets better. He's a wrestler! And a big fan, too. We talk about the top H.S. teams now (Gilroy, Fremont, Wilcox) and about Olympic contenders like Jordan Burroughs (apparently he actually lost to a Russian!). The owner stops by and is now polite. The high school guy is so nice, he only has two pieces of sushi and asks if we can bring some for his two friends. We bring back sushi for the two girls. He's a hero, I've had my sushi, and I've made a new friend I can talk wrestling with.

I'll say it again--wrestlers are a class apart.   

END SCENE.

Campbell, CA -- Military

HAVE A STORY. I meet with a long-time friend for coffee at Starbucks. We are outside and talk about dating, life, careers, and the usual. An older man, casually dressed, about 5'8" and in his 50s with a "beer belly" approaches us. He politely says, "I don't mean to interrupt your conversation with her, but I have a request."   

Him: "I have a Starbucks gift card. It has $18.58 on it. You can check it inside if you want. It's valid. My daughter has cancer, so my fiance and I came here from Arizona to see her. We need some gas money to get back. You pay me whatever you want for it."   

Me: [to friend] "You drink more Starbucks than me. I usually get my coffee at McDonald's and my espresso at indie coffee shops. Sounds like a good deal--$15 for $19?"   

Him: "You can go check it."   

Her: [takes card, goes inside to check it]    

Me: "Where in Arizona are you from?"   

Him: "Nearby Phoenix...place called Glendale. I'm ex-military."  

Me: "I know about Glendale. An acquaintance of mine owns some houses there."

Him: [takes out his driver's license, shows it to me--it's from Arizona] "I used to own houses there, too. I used to have a county job."

Me: "Where did you serve? What was your rank?"

Him: "I served in Iraq and Afghanistan, three tours. I was E-8(?). I killed people." [the last few words are said shakily, with a mixture of hesitation and resignation]

"I have this hernia..." [lifts shirt and shows it to me--though I've never seen a hernia, it is in the lower middle of his stomach and looks serious.]

Her: [comes back, puts gift card on bench] "It has $18.68 on it."

Him: [laughs] "See, I lied. It's got ten cents more than I thought!" [Note: in my experience, lower-level ex-military personnel are generally honest.]

Me: [to friend] "Do you want to buy it?"

Her: "Hmmm, not really." [I realize she was checking the balance for me, not herself.]

Me: "Thank you, but it looks like she doesn't want it."

Him: [takes gift card back, walks away, goes inside, comes out, makes same pitch to someone reading outside, but it doesn't work. Sits next to his fiance and says, with a tinge of frustration, "She [my friend] changed her mind about it." The fiance, a slender woman, calmly motions for him to sit next to her.]

[My friend and I say goodbye.]

Me: [I head inside to break a larger denomination bill, but the line is really long. I take out all the small bills I have, which is less than $10. Unfortunately, I forget that my friend had given me some smaller bills earlier. I come out and hand the bills to the man.] "Hey, sorry about this, but these are all the small bills I have." [I start to walk away after giving him the bills and wave goodbye.] 

Him: [immediately gets up, puts hand in his pocket to get gift card]

Me: "Oh, keep the card. It's cool. I don't want it."

Him: [surprised] "Hey, thank you." [Walks up to me, gives me a firm handshake and then a big hug. I realize immediately he may not be in the best shape, but his arms are still very, very strong.]  [We are still embracing, but are now face-to-face. At this point, I'm mentally not there anymore. I can't process why such a small gesture is causing this level of appreciation. I tell him it's not that much money. He continues speaking and lifts up his shirt sleeve to show me a tattoo on his arm.] 

"This is of my daughter...I have another one of the American flag on my back..." [I am smiling, but I no longer hear him because I don't understand his response to such a small gesture. And then this happens.]  "I love you, man." 

Me: "Hey, don't worry about it, man. It's all good. Take care of yourself." 

[Me, trying to find my car, having a really hard time. Finally find my car, which is about 15 yards in front of the Starbucks. I sit down in my car. I think about going back and just giving him the larger denomination bill I have, but I'm discombobulated. I don't know whether he'll even accept my money. After a few minutes, I drive away. After a while, I realize I don't know where I'm driving. I go to McDonald's to get some coffee, thinking that reading a book will help clear my head. It does not. I head home.] 

END SCENE.

Follow-up: I am used to video-game tough guys berating me online for being anti-war. I am used to stories where people like Chris Kyle (aka American Sniper) are presented as idealistic heroes capable of doing no wrong and who have no regrets about whom they killed. Until today, however, I never met anyone who made me realize the victims of the United States Military are not just innocent civilians living abroad, but many of our soldiers themselves.

I don't know this man's full story. I wish I'd gotten his information. Some ex-service members are not necessarily proud of killing others, but they had a task to do and they did it. When we praise all soldiers or the military in general, we sometimes forget that the individuals who return home may not have themselves believed in the mission. In addition, when we attack those who criticize the military, we forget that all of us have the same objectives--security and long term peace, which cannot be achieved by an unlimited budget, a poorly defined long term plan, or perpetual war. Most of all, we forget that some Americans did what they were told to do, and they deserve more than mere words or unthinking veneration. Men and women who return from war deserve a public who, at the very least, will send them back only if necessary, and who despise war and what it does to everyone involved.

Update: Another friend thinks this might have been a scam. It appears like a perfect sob story--daughter with cancer, etc. But I think I finally understand his disproportionate response to my small gesture: I believed him. Most people thought he's trying to scam them. Now his desire to show me evidence--the AZ license, the tattoos...it all makes sense.

I felt terrible and uneasy after this situation.  The idea that only a few dollars would make a man--who has a seemingly nice woman and who once had a good job--so happy really unnerved me.  Only when I figured out the possible reason for his disproportionate reaction--that I believed him where so many others had not--was I able to settle down. 

S.F. -- on the way to a movie, Don't Think I've Forgotten

Me: [on busy SF bus, sees older man move through] "Would you like my seat?"

Him: "No thank you. One time, someone offered me his seat because he thought I was 72. Do I look 72?"

Me: "No. You look 64."

Woman: [taps my shoulder, smiles] "You're in dangerous territory with age."

Him: "I'm 62."

[Seats open up as people leave, he sits next to me.]

Him: "I'm a Marine. Served in Vietnam. Got out in 72."

Me: "I'm going to see a movie about Cambodia tonight."

Him: "The Cambodians were killing millions back then. You know, I just found out my ship (USS Paul Revere) was exposed to Agent Orange. [Shows me computer printout.]

I have PTSD. Can't even fill out a job application. But I got a disability pension of $2900 a month. Without it, I'd probably kill myself. My dad is a WWII vet. Doesn't want to give his son the credit he deserves.

Hey, she looks Cambodian. [Points to a young woman on bus.] I think she's looking at you. [Big laugh.] You single?"

Me: "Yes."

Him: "My wife is Indo-Chinese. Met her at a bus stop. She'll find you someone. Call me. [Gives me his number.] Semper Fi."

Me: "Semper Fi."

END SCENE.

Santa Clara, CA -- Coolest Professor Ever

Me, to my law school professor: Did you experience any discrimination in your life?

Him: I was the only Latino in my law school. I get asked that question often. I tell people, "My friend's grandmother was very racist. She told me all the time, 'Be careful of white Americans. They are unclean and lack manners.'" 

Later, when I was working with rural legal aid, the police picked me up along with some undocumented farmworkers. I was dressed in the official uniform of a legal aid lawyer: jeans and a shirt. I showed the officer my bar card. He looked at it, didn't know what it was, and told me he didn't care. I then remembered my friend's grandmother: "White Americans lack manners." 

END SCENE.  

Toronto, Canada -- Manners 

In Toronto's St. Lawrence Market. Looking for a place to sit. Hands full with food and a drink. Older man motions for me to sit across the table in an empty plastic chair.

Me: "Where are you from?"

Him: "I come from a country that no longer exists."

Me: "Yugoslavia?"

Him: "No. Let me tell you a story. When I was younger, I would help Madam [motions to his French wife] any way I could. One day, I assisted a woman who was famous, but I didn't know her. When I finished helping her, she asked me the same question, and I gave her the same response."

Me: "Why doesn't your country exist anymore?"

Him: "I'm Egyptian. I'm Christian. When I was growing up, people had manners."

Me: "But the old always say the same thing about the young, in every generation. Did anyone bother you growing up in Egypt?"

Him: "No one bothered me. They wouldn't dare. You see, in old Egypt, people would address each other by titles or by Mr. and Mrs. No one would take a tip. I would offer sometimes, but no one would accept in Egypt. I miss the common decency of the common man in the street."

Me: "You're right. You were the only person who motioned for me to sit down." [Gets up to leave.]

Him: "Good luck to you."

San Jose, CA -- Computer Problems

Me, day after after helping cousin with laptop: "I just remembered. Did you turn on your firewall?" Younger cousin: "Yes. I turn it off?" Me: "What? No! You are supposed to turn it on. What the hell? This is why you have viruses. You don't know what a firewall is?" Her: "Oh come on, of course I know." Me: "Then why did you say you were going to turn it off?" Mom, interjecting: "What is a fireball?" Me: [doubling over in laughter] END SCENE. 

Krakow Airport -- Immigration (2017) 

Me, with Polish guy in airport. He’s friendly and in his late 20’s. Me: “In America, we heard 60,000 people marched in Poland recently against refugees and also chanted, ‘Poland for white people.’” Him: “Not true. They [the majority] never said such things. The TV spreads something a few people said. We do not want economic migrants. They just want cash [welfare]. If you want to work, you are welcome here.” Me: “When the Germans invaded Poland, many Poles fled to America, especially Chicago. Even though they were poor, America accepted hundreds of thousands of them. Now, Poland is part of NATO, and NATO initiated a war in Syria, causing Syrians to flee. But you won’t accept them?” Him: “We like anyone who works. You work hard, we like you.” Me: “Ah, so the Poles who went to America worked hard, which is true. But do you remember 5, 10 years ago, the EU did not want Polish workers. The UK unions and people said the Poles work too hard, for less money, and they are lowering our wages.” Him: [Looks surprised] Me: [Damned if you do, damned if you don’t. People everywhere fear change.] END SCENE.

More Airport Stories (2017)

Me, to German man on my airline, after discussing his Indonesian wife: "What's love to you?"

Him: "Someone is [always] waiting for you."

Federal Budget Discussions (2010)

The link below has a summary of a recent electronic town hall meeting:

http://usabudgetdiscussion.org/national-town-meeting-results/

I attended the meeting. I was surprised to see that cutting 15% from the defense department and other agencies and raising SS taxes were not enough to balance the budget. A combination of spending cuts and tax raises were required to balance the federal budget. Many people at my table and nationwide supported a carbon tax, even after I argued that such a tax should not be passed until it was accompanied by a corporate tax credit to upgrade utility/energy facilities. (Without a credit, it is very likely that utilities will impose the costs of making their facilities environmentally-friendly on consumers.)

I learned that I wanted to limit the mortgage tax deduction/credit. As is, the mortgage tax deduction benefits rich people or people who spend more for houses. In short, it is a tax cut for the rich and upper-middle class that leads to inflated housing prices. Overall, I had a good time at the meeting.

General Links

On political contributors.

On the middle class.

The Daily Show on religious freedom.

Michael Jackson's Glove

At the Hard Rock Hotel in Vegas, I saw Michael Jackson's glove (see picture above).

The HRH also had a letter from Michael Jackson to a friend. MJ mis-spelled the word, "immortal." The immortal King of Pop can't spell "immortal." God has a sense of humor.

A Riddle for My Readers

Question: A bat and a ball, together, cost a total of $1.10. The bat costs $1 more than the ball. How much is the ball?

The answer is not 10 cents.

Niall Ferguson on George W. Bush

From Niall Ferguson's The Ascent of Money, paperback, Penguin Books, 2008-09, page 119:

During [George W.] Bush's time in the White House, his administration ran a budget deficit in seven out of eight years. The federal debt increased from $5 trillion to more than $9 trillion. In 2008 the Congressional Budget Office forecast a continued rise [in the federal debt] to more than $12 trillion in 2017.

Where was the anti-spending Tea Party then?

Bonus: It is no coincidence that in English the root of "credit" is credo, the Latin for "I believe." (page 31).

Page 36: "For Christians, lending money at interest was a sin. Usurers, people who lent money at interest, had been excommunicated by the Third Lateran Council in 1179. Even arguing that usury was not a sin had been condemned as heresy by the Council of Vienna in 1311-12...

See Deuteronomy: 'Unto a stranger thou mayest lend upon usury; but unto thy brother thou shalt not lend upon usury.' In other words, a Jew might legitimately lend to a Christian, though not to another Jew. The price of doing so was social exclusion." (pages 36-37)

Money is worth only what someone else is willing to give you for it. An increase in its supply will not make a society richer, though it may enrich the government that monopolizes the production of money. Other things being equal, monetary expansion will merely make prices higher. (page 27, on inflation)

"The Weimar tax system [which led to massive inflation, making the German mark basically worthless] was feeble, not least because the new regime lacked legitimacy among higher income groups who declined to pay the taxes imposed on them. At the same time, public money was spent recklessly, particularly on generous wage settlements for public sector unions." (See page 104. My reaction? The more things change, the more they stay the same.)

Once there had been meaningful social ties between mortgage lenders and borrowers. Jimmy Stewart [in It's a Wonderful Life] knew both the depositors and the debtors. By contrast, in a securitized market (just like in space) no one can hear you scream--because the interest you pay on your mortgage is ultimately going to someone who has no idea you exist. (page 262)

"Roughly two fifths [40%] of the world's population is effectively outside the financial system, without access to bank accounts, much less credit." (page 282)

On LTCM: At the end of August 1997 [prior to the its collapse in August 1998] the fund's capital was $6.7 billion, but the debt-financed assets on its balance sheet amounted to $126.4 billion, a ratio of assets to capital of 19 to 1...On Friday 21 August 1998, it lost 550 million--15 per cent of its entire capital, driving its leverage up to 42:1. (pages 324, 327)

"In 2007, the United States needed to borrow around $800 billion from the rest of the world; more than $4 billion every working day. China, by contrast, ran a current account surplus of $262 billion, equivalent to more than a quarter of the U.S. deficit." (page 355)

Note: Italy invented banking; the Dutch founded the first joint-stock company (i.e., stocks); France founded the first central bank; and the Scots founded the first insurance company.

HAL and Wall Street

From Timothy Lavin (The Atlantic, August 2010):

By some estimates, algorithms now trigger 70 percent of all trades in U.S. equities. The speed and volume of everyday trading have propelled the market into a new and esoteric dimension, and rendered traders in the pits largely obsolete. Average daily share volume on the New York Stock Exchange increased by 181 percent between 2005 and 2009, while the time required to execute a trade on its electronic systems dropped to 650 microseconds.

Over 2/3 of all trades are made by computers? Who is looking out for the buy-and-hold investor? Seems like all the benefits go to the speculators these days. More here.

To the Anonymous Commenter

To the anonymous person who left a detailed comment regarding a Bay Area judge:

Thank you for reading my blog and taking the time to post your comment. Unfortunately, I cannot publish your comment. I am an attorney, and my license to practice law is a privilege given to me by the state bar. Being a member of the bar requires me to adhere to certain rules, including ethics rules. Some of these rules prevent attorneys from publicly criticizing judges.

You may wonder how someone like me--who favors free speech and disfavors content-based speech restrictions--can reconcile his personal beliefs with his refusal to publish your comment.

First, I am a pragmatic man. As long as I am a lawyer, I exist to serve my clients. If local judges think I will publish negative commentary about them, some of them may do whatever they can to harm my cases. The law gives judges much discretion, so it is unwise to give a judge any incentive to go against you.

Second, in theory, the judicial branch exists as a check on the passions of the people. This special role requires judges to be independent. Judicial independence is difficult to achieve if lawyers are openly criticizing judges to a public that lacks the training to understand difficult legal concepts. As it stands, American judges have, for the most part, remained above the political fray and are viewed as neutral by most Americans. This favorable perception is due in part to maintaining a closed system of criticism, which gives the public fewer opportunities to sensationalize court hearings and rulings. In short, cases are unique, rights are precious, and unsubstantiated public criticism about specific judges makes it more difficult to execute judgments and have faith in the legal process.

I hope you understand my position, and I hope you will continue to read my blog.

Update on March 2017: I've become extremely critical of lawyers as well as judges; however, I no longer have an active caseload, so my primary duties are to the public and to the truth, not to my clients.  

Linkfest: Articles

I've included a link to some wonderful articles HERE. I really enjoyed the one about the classical musician playing in a New York metro station.

Rant: We Live in Amazing Times

I hate the way some people chide developments in technology, as if progress were something to be feared. Multi-player video games? “What about exercise?,” they scold. Email? “Makes things too impersonal,” they say. Facebook? “What about the quality of the relationships?” they shrill. iPhone? “But we’ll be glued to our phones at the expense of real life,” they argue. Each and every one of the naysayers reminds me of Victorian England–a place where people yearned for fixed rules and regulations designed to ostracize newcomers and entrepreneurs.

Every time a new communications invention occurs, we should be ecstatic. Google is apparently working on a phone that will automatically translate languages. Do you realize that within five to ten years, we might be able to call anyone on the planet and have a conversation?

Also, the internet is a godsend for people who are better at writing and reading than speaking and small talk. What’s wrong with a medium that gives an advantage to people who excel at spelling, writing, and grammar? What's wrong with being able to instantly broadcast your ideas to the world for free? Yes, there are some downsides to giving everyone a microphone, but why not focus on the gems we wouldn't have discovered if Big Media (GE, Disney, News Corp, Viacom, CBS) were still in total control of mainstream media?

Overall, the pace of innovation over the last fifteen years has been amazing. We can watch movies and television shows online (Hulu); sell anything directly to millions of people (eBay); talk to people worldwide for free (thank you, Skype); text message anyone (VZ, T); and keep in touch with friends and acquaintances with minimal effort. I realize we're in a recession, and the unemployment picture isn't pretty. But if you ask me, what we've accomplished over the last fifteen years is much more useful to the average person than going to the moon. Yet, almost all Americans loved the idea of space travel and were rightly proud of the Apollo missions. It is sad today to see most Americans not as openly appreciative of our more recent inventions. As far as I'm concerned, what we've done over the last fifteen years is just as good, if not better, than going to the moon. I'm just sayin'.

Sample Letter to Congressperson re: Hearing Aid Tax Credit

If you saw my review of Plantronics recent shareholder meeting, you noticed that Congress is considering a hearing aid tax credit. Unfortunately, the House bill doesn't cover most hearing-impaired working adults. In contrast, Senator Harkin's version of the bill--S. 1019--covers all hearing-impaired persons. If you would like to write your Congressperson and support Senator Harkin's bill, I have included a sample letter below. Just fill in the name of your House Representative, your own name at the bottom, and paste it in an email to your Rep. Your House Representative can be located here.

Dear Honorable NAME OF REPRESENTATIVE:

I am a long-time resident of your congressional district. I am writing you regarding HR 1646 (The Hearing Aid Tax Credit bill.)

I understand you are a co-sponsor of this bill. Unfortunately, this bill limits the tax credit to hearing impaired people who are 55 and older and dependents. The bill completely ignores working people who are under the age of 55.

Without well-functioning hearing aids, hearing-impaired workers will not have full access to the workplace. Thus, they will be unable to compete with other workers.

Expanding the tax credit to all ages will ensure that hearing-impaired workers will be able to compete in the workplace. Accordingly, I ask you to support an amendment to this bill which was ensure that credit would be extended to all regarding of age.

This amendment would be similar to the S. 1019, which covers all ages.

In closing, thank you for your time and consideration.

Sincerely,

YOUR NAME

Plantronics Annual Shareholder Meeting (2010)

Plantronics (PLT) held its 2010 annual shareholder meeting on July 27, 2010. About ten shareholders were treated to tea, Peet's coffee, and bottled water. When entering Plantronics' headquarters, you will see a small (about 50 yards) museum on your right-hand side. This museum chronicles Plantronics' accomplishments since 1960, including its work with NASA and the Apollo shuttle launches. One of the most interesting museum pieces is an autographed picture from Buzz Aldrin to Plantronics' salesperson Steve Spragens. This space-age theme seems to heavily influence Plantronics ambiance--its building sections have names like Apollo, Cosmos, and Quasar.

The first thing I noticed when I walked into Plantronics, other than the mini-museum, was the pleasant vibe. The employees seemed happy and productive, and Investor Relations personnel made me feel very welcome. I was surprised, because the previous day, when the company reported what seemed like good earnings, Wall Street still punished the stock by 10%. (Note: over the past two years, PLT stock has soundly beat the S&P 500.)

Plantronics' CEO Kenneth Kannappan delivered most of the formal and informal presentation using a slideshow. Plantronics seeks to deliver unified communications ("UC") to corporations, positioning itself as the primary communications integrator for a company. The goal of UC is to integrate a company's voice, data, and video-based communications systems. Although Plantronics creates the majority of its software internally, Plantronics works with Cisco (CSCO), Microsoft (MSFT), and IBM (IBM) to implement UC programs (10K, page 3).

CEO Kannappan said he wanted to make communicating "simple and enticing" so that the return on investing in Plantronics' products would be justified. He also discussed Plantronics' focus on improving the "fidelity of the conversation."

Speaking of improving conversations, Plantronics owns Clarity, which makes phones and devices for the hearing impaired. I happen to be hearing impaired, and I use a Plantronics' Ameriphone XL-50 telephone. It is a big, clunky device, but it has served me well for the past decade. Without it, I'm not sure I'd be able to run my own business as a solo practitioner. The Clarity division doesn't significantly add to Plantronics' bottom line, but it still helps--in the first quarter of fiscal 2010, Clarity contributed $4.1 million to Plantronics' overall $141.2 million. More recently, in 1Q fiscal 2011, Clarity revenue was $5.1 million out of a total corporate revenue of $170.7 million.

Perhaps Clarity isn't doing as well as it should. As Americans get older, more and more them are losing their hearing, so it's surprising not to see a larger demand for Clarity products. I believe the low sales comes from a lack of attention and marketing of the Clarity brand. For example, when I was writing this post, I tried to log on to Clarity's website to view more products. The website was down. Earlier, when I had a chance to view an ad for the Clarity amplified C4220 telephone on Clarity's own website, the word "intelligent"--a word most elementary schoolchildren can write--was mis-spelled. (Note: I bought the C4200 and hope to use it soon. It is apparently a significant upgrade over the much older XL-50.)

Also, how many people would be happier with a higher maximum volume of their cell phones? I own a Palm Pre Plus (HPQ), and although I am happy with it overall, I rarely use it to talk, because its amplification isn't very high. When I was shopping for cell phones, I assumed I had no options for a good conversation and focused on comparing text messaging features. It turns out that Plantronics offers a cell phone--the ClarityLife C900--for senior citizens (a code word generally used in corporate-speak to refer to people who are hearing and/or visually impaired). It would have been nice to be able to walk into a store and try the C900 before buying a smartphone.

Anyway, I'm not surprised at the lack of attention given to hearing impaired professionals--society is used to children and senior citizens being hearing impaired, but not anyone in between. How else can we explain why the recent House bill (HR 1646) on a hearing aid tax credit only covers children and senior citizens? Boo to Reps. Carolyn McCarthy (D-NY) and Vern Ehlers (R-MI). My family had to spend thousands of dollars for hearing aids when I was growing up with no government support. Now that a bill might be passed to help ease the burden of spending 3,500 to 10,000 dollars on hearing aids, the House wants to exclude hearing impaired adult professionals like me?

(Kudos to Sen. Thomas Harkin (D-IA) for sponsoring S. 1019, which covers all age groups. It's hard not to love Iowans--the state has a low unemployment rate, moderate politics, and basketball star Ali Farokhmanesh.)

Anyway, back to the meeting. The Q&A session was brief. Another shareholder asked, "Are you hiring?" CEO Kannappan said the company was hiring in UC, firmware/software, software support, tech support, and field sales agents, and the increase in hiring would be "gradual."

I asked about Plantronics' decision to shut down and sell a 200,000+ square foot building in Suzhou, China. Plantronics had decided to move its Bluetooth headset manufacturing operations from Suzhou to Weifang, China. (See 10K, page 14.) CEO Kannappan said the new supplier in Weifang, China is in a better position to offer Plantronics "cost-savings."

Disclosure: I own an insignificant number of Plantronics (PLT) shares.

Criminals, by the Numbers

The American justice system, by the numbers:

1.7 million criminals behind bars.
4.3 million people on probation.
700,000 people on parole.

From Wilson Quarterly, Summer 2010, page 74, citing, American Interest, March/April 2010.

Bonus: "California's prison guards have become the state's largest personnel expense, creating a situation in which the government's cost to house each prisoner is an astounding $45,000 per year." More HERE and HERE.

Goldman Sachs' Report on Immigration

In 2008, Goldman Sachs issued an excellent report on immigration and the American economy. You can read the report HERE. The paragraph below is probably one of the most interesting parts of the report:

Immigration is probably a small net positive for the federal budget, because incremental tax revenues outweigh the limited services allowed to immigrants. States and localities often pick up the slack in providing social services to immigrants, and therefore incur considerable costs, particularly in states with a large share of unauthorized migrants.

The costs immigrants pose to the federal budget are probably relatively low. The welfare reform passed in 1996 stipulated that states could not use federal grants to finance benefits such as Temporary Assistance to Needy Families, Medicaid, etc. to non-citizens, though they could still offer such assistance with their own funds. However, the American-born children of immigrants (whether authorized or not) are citizens and thus entitled to benefits.

At the same time, immigrants do provide tax revenues to the Treasury. Even illegal immigrants pay federal taxes: in order to demonstrate eligibility for employment, undocumented workers often use fake Social Security cards with numbers “borrowed” from others or simply made up. When federal payroll taxes and income taxes are withheld from their paychecks, funds accumulate in the Social Security trust funds with no parallel entitlement. Since the Immigration Reform & Control Act went into effect during the late 1980s, inflows into the ‘Earnings Suspense File’ have increased dramatically (Exhibit 8). The cumulative taxes held in this account are $463 billion...

The situation at the state and local levels is very different. According to a ruling of the Supreme Court, these jurisdictions cannot withhold public education and emergency medical services from either legal or illegal immigrants residing in the United States (Hanson, p. 13). As states generally foot the bill for these services, outlays for immigrants likely outweigh the corresponding tax revenues.

Like I said, very interesting stuff. Overall, it sounds like Goldman Sachs is saying that the federal government receives benefits from illegal immigration while states and local governments do not.

Political Polarization

From Chris Hedges’ book The Empire of Illusion: The End of Literacy and the Triumph of Spectacle:

What counts today isn’t engaging the other side with reasoned arguments; it’s building a rabid fan base by demonizing the other side and stoking the audience’s collective sense of outrage and victimization. And that’s a job best performed not by serious thinkers but by hacks and hucksters. Rush Limbaugh, Glenn Beck, Sean Hannity, Mark Levin, Joseph Farah, Ann Coulter, Michelle Malkin: they adorn the cathedral of conservatism like so many gargoyles.

Hat tip to Not a Potted Plant.

Bonus, from same author and book:

We are a culture that has been denied, or has passively given up, the linguistic and intellectual tools to cope with complexity, to separate illusion from reality. We have traded the printed word for the gleaming image. Public rhetoric is designed to be comprehensible to a ten-year-old child or an adult with a sixth-grade reading level. Most of us speak at this level, are entertained and think at this level. We have transformed our culture into a vast replica of Pinocchio's Pleasure Island, where boys were lured with the promise of no school and endless fun. They were all, however, turned into donkeys -- a symbol, in Italian culture, of ignorance and stupidity.

I find myself both awed and saddened by Hedges' summary of American public discussion.

On Family

I had a conversation recently with a friend who discussed the difficulties of child-rearing. Then I read this:

The truth is that, with the birth of the first child, marvelous changes take place. From that moment on, mama is no longer the center of attention; the baby is. Mama and papa will give—-and willingly-—and the baby will take. They will assume responsibility, earn money, employ their energy, change their lives, if necessary—-all for the baby. This is no light undertaking, but the business of life is starting now, and every day of mama's life proves it to be so. And here her struggle starts. She wants to give everything to the baby; she wants equally to hold on to herself, her intelligence and uniqueness, while the baby constantly tries her patience, her strength, her nerves, and roots out of her the deepest emotions she has ever known in her life. This is a whole new process, and not one that provides built-in security.

The more things change, the more they stay the same. Fascinating Atlantic article from 1961 HERE.

The More Things Change, The More They Stay the Same

In 2010, the immigration debate seems to be reaching a fever pitch. It's important to note that the same racially-charged arguments against immigration have been made before. In short, the more things change, the more they stay the same. Guess the year Economist W. Jett Lauck made the following statement:

"our industrial system has become saturated with an alien unskilled labor force of low standards, which so far has been impossible to assimilate industrially, socially, or politically, and which has broken down American standards of work and compensation."

From Wilson Quarterly, Summer 2010, page 20; originally from "The Lesson from Lawrence," published in 1912. Mr. Lauck was apparently referring to Italians, Slovaks, Magyars, and Croatians. I wonder what Justices Scalia and Alito think about the Arizona anti-illegal-immigration law.

EMC and Brocade

Update on 9/2/10: this was posted on July 23, 2010, when BRCD was around 5.03. BRCD declined even further over the next few weeks, dropping to around 4.70. On September 2, 2010, BRCD went as high as 5.64. I get concerned when a stock pops over 20% in less than a month, and with my "two in the hand is better than one in the bush" mentality, I reduced my positions substantially. BRCD is no longer my largest holding, and I no longer have an opinion about the direction of its stock price. However, I continue to think a "horizontal acquisition" (when a competitor buys out its competition) would be ideal for EMC and BRCD. Original post is below.

Update on 9/7/10: today, I sold all but one of my BRCD shares. Will I regret my decision? Perhaps. But as I said earlier, I am risk-averse, especially after seeing a stock move higher so quickly.

More here, in case anyone is interested. Check out the comments section within the link.

____________

I've got a superstitious side. I sometimes get gut feelings based on no evidence or new information, and yet, my logical side fails to ignore these feelings. I know this: I am no prognosticator. You should not rely on my subjective opinions. For some strange reason, I just got a gut feeling that EMC may be buying out Brocade (BRCD). I used to think IBM would buy out Brocade, but now EMC seems a more viable suitor. No logic is involved, just a sudden gut feeling. As of today, Brocade is trading around 5.03/share.

Mind you, I have no idea if or when Brocade will be bought out, but it seems clear that BRCD is too small to compete against IBM, HP, or Cisco. Yet, despite all odds, Brocade continues to offer excellent technology and human capital. As such, once Brocade's earnings get back on track, it will be an attractive takeover target. It seems to me that a smart suitor will buy a beaten-down company right before it starts doing well, not after. Once Brocade performs well, its stock price will increase significantly, making a buyout more expensive. Right now, though, if EMC were to offer Brocade $7.00/sh, I would be very pleased.

Disclosures: I own Brocade (BRCD) shares. As of July 23, 2010, Brocade is my largest individual stock holding. However, my holdings may change in the future.

Update: conventional wisdom indicates a buy-out won't happen any time soon. Oracle's Ellison has indicated he isn't interested in Brocade, and HPQ/Dell seem to be moving towards more software-based companies. Also, EMC has publicly stated it is looking at sub-billion dollar purchases, so perhaps BRCD is too expensive for EMC. Even so, I continue to believe that Brocade will be bought out at some point.

The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result. Unless specifically stated otherwise, no portion of this blog is commercial in nature in any fashion, nor operated for profit. All copyrighted material reproduced herein appears under a claim of fair use. Nothing herein constitutes legal advice, in any state; those seeking legal advice should consult with an attorney licensed to practice law in the appropriate jurisdiction. No guarantee made of updates at any rate of frequency or periodicity. All statements of fact in this blog are derived from sources reasonably and in good faith believed to be true and accurate. Author not responsible for any harm arising from following anything construed as advice herein.

Movie Recommendation

I highly recommend the 1963 film, Lilies of the Field. Very funny and appropriate for all ages. It is perhaps Sidney Poitier's best film.

Being Self-Employed

Carrie Belt explains what it's like to be self-employed and trying to save for retirement:

http://www.associatedcontent.com/article/5582958/at_28_investor_bitten_by_a_bad_market.html?cat=3

We can't file for unemployment income when work is scarce. There's no severance plan when clients zip shut their pocket-books. While I continue to contribute to my retirement savings when I can, my financial focus is simply staying out of debt. For retirement, I'm on my own. I've never had a plan through another employer. I'm OK with that independence, but I'd love for someone else to pay for my coffee breaks, sick days and health care expenses.

Amen, sister.

Civil Liberties? What Do You Have to Hide?

Warning: article at the link below uses snarky language:

http://www.cracked.com/article_18620_6-completely-legal-ways-cops-can-screw-you.html

Oh, the busy populace.

Derivatives Trading: a Dangerous Game

[Note: this post has been updated since its original publication.]

HERE is one of the best-written articles on the 2008-2009 financial crisis [Washington Lawyer, June 2010]. The numbers in Anna Persky's article are breathtaking, and not in a good way. I've added some other numbers, including two interesting numbers from a recent Economist issue.

300 trillion. The CFTC's Chairman "[Gary] Gensler has estimated that the [2010] OTC derivatives market is worth $300 trillion." If you think that's a large number, brace yourself: according to The Summer 2010 edition of The Hedgehog Review, The Bank for International Settlements in Basel, Switzerland estimated that at the end of 2007, the market for unregulated derivatives was $1 quadrillion.

54.5 trillion. The net worth of U.S. households on or around August 2010 was approximately $54.5 trillion, according to "The Globalist Quiz" (re-published by the San Jose Mercury News on August 8, 2010).

47 trillion. According to a July issue of The Economist, the total value of stock trades executed on the American stock market in 2009 was $47 trillion. American stock markets were "the world’s most active, with shares worth nearly $47 trillion, thrice the market capitalisation, changing hands during the year."

45 trillion. "The market size for credit default swaps increased rapidly—-by 2007 the market had a notional value of $45 trillion, about twice the size of the U.S. stock market."

15.1 trillion. According to a July issue of The Economist, the total market capitalization of the American stock market at the end of 2009 was $15.1 trillion. Also, people traded American-listed stocks so many times in 2009, by the end of the year, the value of their stock trades totaled three times the value of the entire stock market. (See 47 trillion number, above.) And yes, in 2007, just the market for credit default swaps was three times the value of the entire stock market at the close of 2009. Shadow banking, indeed.]

14.2 trillion. According to "The Globalist Quiz," re-published by the San Jose Mercury News on August 8, 2010, the U.S. GDP--the amount of the goods and services produced by all Americans in a given year--stands at around $14.2 trillion.

13.2 trillion. According to the U.S. National Debt Clock, as of July 2010, our national debt was approximately $13.2 trillion.

9 trillion. According to Niall Ferguson's book, The Ascent of Money, "Between 1997 and 2006, US consumers withdrew an estimated $9 trillion in cash from the equity in their homes. By the first quarter of 2006 home equity extraction accounted for nearly 10 per cent of disposable personal income." (page 267, paperback)

1 trillion. At the end of fiscal 2008, states had a $1 trillion funding shortfall in public sector retirement benefits. From the Pew Center: "There was a $1 trillion gap at the end of fiscal year 2008 between the $2.35 trillion states had set aside to pay for employees' retirement benefits and the $3.35 trillion price tag of those promises."

992 billion. From ABA Journal, page 59, March 2010: "[R]evolving credit grew from $48 billion in 1978 to $131 billion in 1985 and reach[ed] a high of $992 billion at the end of 2008."

434 billion. "Between 2004 and 2006, Freddie Mac and Fannie Mae, government-chartered mortgage finance firms, purchased $434 billion in securities backed by subprime loans."

On Complexity: “The beauty and the danger of derivatives is that you can create almost anything, and the degree of complexity that is available is almost limitless,” says Robert A. Wittie, a partner specializing in securities finance and investment management at K&L Gates. “Used properly, that can be terrific. But it can become very opaque. It can be hard for investors to understand the assets they are buying.”

Passing the Buck: “When you tell someone that they can sell a hand grenade with the pin out, but they don’t need to worry about it because someone else will own it when it goes off,” [Attorney Philip] Johnson says, “you get a lot more hand grenades with the pin out being sold.” [I've talked about this attenuation problem in detail HERE.]

Canaries in the Coal Mine?: Orange County went bankrupt in 1994 after its treasurer "invested the funds in a leveraged portfolio of mostly interest-sensitive derivatives contracts." Then came Barings Bank in 1995 and LTCM in 1998. The LTCM disaster required a 3.6 billion dollars bailout, which now looks like a paltry sum. In 2001, Enron declared bankruptcy in part due to its derivative trading.

The Fed Asleep at the Wheel?: In 2008, Alan Greenspan emphasized that, excluding credit default swaps, the “derivatives markets are working well.” [Earlier, in 2003, Warren Buffett called financial derivatives “weapons of financial mass destruction.”]

Will the recently passed financial regulation help prevent future problems? On July 15, 2010, CFTC Chairman Gensler said: “The Wall Street reform bill passed today is historic and comprehensive. Over-the-counter derivatives dealers will – for the first time – be subject to robust oversight for their derivatives activities. Standardized derivatives will be required to trade on open platforms and be submitted for clearing to central counterparties. This will greatly improve transparency and lower risk in the marketplace. I look forward to the President signing this crucial legislation. The CFTC stands ready to implement the Dodd-Frank [Wall Street Reform and Consumer Protection] Act to best protect the American public.”

What took Congress so long?

Funny Stuff My Mom Sez

Breakfast

Saturday morning, 8:00AM.

Me: "Okay, Mom, let's go get some pancakes."

Mom: [excited] "Are we going to IHOP?"

Me: "No, someplace better, called Stacks."

Mom: [incredulously] "Better than IHOP???!!"

Me: [shaking head] "I can't believe you think IHOP is the pinnacle for pancakes."

[Update: she liked Stacks, but didn't think it was significantly better than IHOP.]

Not sweet smelling by any name

Mom: "What smells? Something smells really bad."

Me: [finally noticing a smell]

Mom: "It's a skunk, be careful!"

Me: "Uh, Mom, I think that's m*rijuana."

Mom: "In the daytime?"

One Immigrant's Perspective on America

Below is one of the most awesome letters I've ever read. First published in the San Jose Mercury News (July 3, 2010): 

It took awhile for me, an Indonesian Muslim who works and lives in America, to appreciate the significance of July Fourth. Then, I came across a quote of President John F. Kennedy that helped me understand: "Let every nation know, whether it wishes us well or ill, that we shall pay any price, bear any burden, meet any hardship, support any friend, oppose any foe to assure the survival and the success of liberty." 

Since I have lived here, this nation has given me an education, freedom, security and the liberty to become a part of its society. I understand and realize that this country has paid a huge price and sacrificed many of its citizens for me, and so many others like me, to enjoy these freedoms. For this I am very grateful and this July Fourth, I simply want to say to the Founding Fathers, "Thank you." 

Tahir Ahmad 

Milpitas, CA 

Props to Mr. Ahmad.

Do Anti-Immigration Activists Use Funny Math?

Check out THIS article, alleging that illegal immigrants cost California 10.5 billion dollars a year.

The basic premise is that the children of illegal immigrants constitute 15% of the school-age population, which costs California 7.7 billion dollars annually. I call shenanigans.

How does adding an extra 15% to the school-age population add 7.7 billion dollars in expenses? Does that sound right to you? If you increase class sizes, other than extra classroom supplies, how exactly do costs go up by the billions?

At some point, new teachers have to be hired (usually resulting in jobs to American citizens), and new classrooms built, but new construction and new supplies do not cost billions of dollars each year. In short, there is some funny math going on here.

Here's how I think the partisan institute came up with $7+ billion: California's K-14 education programs receive about 50 to 60 billion dollars a year total. Take 15% of that, and you end up with about 7.7 billion dollars, a very rough estimate that doesn't factor in teacher pension costs, lifetime medical benefits, and other undefined wage/benefit obligations.

Remember: 80 to 85% of education funding goes to teachers and administrators (mostly to teachers and teaching staff). That leaves 15% to the kids. 15% of 15% = just 2.25% of total education expenditures--not an additional 15% increase in education costs. A billion dollars is still significant, but it's nowhere near the scary 7.7 billion dollars number.

Another person's response: Fact: illegal immigrants "tax" our system through free schooling, healthcare (going to emergency rooms for simple colds and ridiculous laws forcing hospitals to treat them), and the thousands of examples of illegal immigrants committing crimes and packing out jails. I know both legal and illegal immigrants. Guess which ones care about laws?

If illegal immigrants even cost the system $10 it's too much. THEY ARE ILLEGAL. Not sure what's so difficult to understand about that. Or, do you support rapists rights, too? How about bank robbers? How about people who double park or run red lights?

The article is a brief synopsis of expenses. Do you really need it broken down to understand that it's bankrupting our state? Maybe the public hospitals that have closed down in the Bay Area are example enough. No? How about the school closings?

Response to above: Illegal immigration is a complicated topic, made even more complex by the absence of reliable statistics on tax revenue (which includes sales, gas, and uncollected Social Security taxes). I just worry when anyone singles out a particular group for much of society's woes. Such resentment is easy to inflame into hatred—and easy to exploit.

I will say this: we've had illegal immigration for many decades, and we still managed to have schools and public/county hospitals do well. Thus, it seems that the issues facing schools and county hospitals result from a multitude of different factors, not just illegal immigration. Also, if the children of illegal immigrants do well and become net contributors to the tax base, many of the financial issues relating to illegal immigration become moot. Just my two cents.

Sigma Designs Annual Shareholder Meeting (2010)

Sigma Designs Inc. (SIGM) held its 2010 annual shareholder meeting in its San Jose, California headquarters. CFO Thomas Gay handled the business portion of the meeting, introducing the Board and executive team. VP of Worldwide Sales Sal Cobar handled the informal presentation, which included a slideshow. Chairman of the Board and CEO Thinh Q. Tran was also present.

Mr. Cobar talked about Sigma's status as one of the top providers "of integrated home entertainment chipset solutions." (Sigma's main competitor is Broadcom (BRCM).) The easiest way to describe Sigma is that it's the NVDIA for non-gaming consumer electronics products, i.e., it makes the IC chip that goes into set-top boxes used with numerous consumer devices, from your home security system to your home entertainment system to your DVD player.

Mr. Cobar said that Sigma creates a more "stable environment" for connectivity. This connectivity allows the consumer to integrate numerous home entertainment products. (Note: Sigma's connectivity solutions work on coax, phone lines and power lines.)

For example, Sigma plans on releasing a product that allows consumers to take content from their laptops and project it onto a large television screen. This product, Neo-Vu, will use UWB (ultra wide band) technology to stream content including HDTV from a computer to a television. The computer may be using Wi-Fi or other technology to obtain the content.

Mr. Cobar also mentioned that Sigma recently completed its acquisition of Coppergate, which creates good "synergy" and increases Sigma's sales volumes and ability to scale its technology.

Some slides showed Sigma's FY 2010 net income as $2.5 million on $209 million of revenue. Sigma also has $133 million in cash or cash equivalents, a very high amount for its market capitalization.

In the overall market, 29 million units of IPTV set-top boxes were installed in 2010, and one slide showed that iSuppli, a market research firm, predicts sales of 37 million units in 2011 and 46 million units in 2012. Sigma wants to be on the forefront of this increased demand by powering the "digital home" in three ways: creating the digital family room; the connected home; and the smart home (i.e., energy, security, and entertainment).

Indeed, some Sigma-related products are truly cutting-edge. For example, one device is a combination security system and energy saver. Rather than try to change personal behavior or habits, this product makes energy conservation automatic. No more debating about how to save energy, researching what kind of lightbulb to use, or telling the kids to turn off the lights when you leave the house. When you set this security alarm, the device powers down electronic devices and other energy sources in your home, lowering your monthly energy bill automatically.

Another product tells you when your water pipes are in danger of freezing and automatically shuts down the water flow if a dangerous situation develops. In short, the product prevents burst water pipes and saves you from having to install new pipes in your home, which can be very expensive.

[Note: the products mentioned above use Sigma's Z-Wave technology inside, thus allowing them all to inter-operate, but the actual finished products are manufactured and marketed by members of Sigma's Z-Wave Alliance family including 2Gig technologies (e.g., the alarm panel) and FortrezZ (e.g., the water shut-off valve).]

One interesting piece of lingo: in its presentation, Sigma used the term, "prosumer"--a combination of professional and consumer. I only mention it because I've never heard the term before.

CFO Gay opened the Q&A session after Mr. Cobar's presentation. I asked about content availability. Some of Sigma's home entertainment technology is ahead of its time, such as 3D movies. It's true the technology is there, but if there are only ten or twenty movies that incorporate 3D technology, how quickly can the market grow? Mr. Cobar said that several years ago, he had been working with HDMI televisions, and the exact same question came up, i.e. "Where's the content?" In a play on the better mousetrap, he said, "If you build the ecosystem, the content will come." He also contended that people don't want to go back to the old/standard way of watching television, so at some point, these new technologies will become mainstream just like digital TV and HDTV.

Mr. David Lynch, VP and General Manager of the Media Processor Group, also pointed out that Sigma is set up to handle all coding and DXP sources, i.e., it doesn't matter what the standard is, Sigma can handle it. CFO Gay lauded Sigma's ability to adapt, saying that the "majority of [Sigma's] engineering talent is software-based," meaning that Sigma can adapt its software to work with any hardware.

I mentioned that a financial analyst had predicted Sigma's FY2011 EPS to be $1.17/share, which is significantly higher than the FY2010 $.09/share. CFO Gay indicated that he could not comment on analyst predictions, but the analyst might be relying on "pro forma" or non-GAAP earnings, which don't include certain charges, such as stock option expenses, amortization expense related to acquisitions and other lesser adjustments.

Another shareholder questioned the size of Sigma's Board of Directors, saying it was too small. He also said that having the same three Board members on the audit and compensation committees might present a conflict of interest. CFO Gay responded that the current Board system has "worked very effectively for" Sigma, and Sigma also relies on external compensation studies and outside experts, not just internal sources.

Overall, Sigma seems to be on the cutting edge of consumer electronic, energy, and security products. Let's hope the consumer catches up.

Disclosure: I own an insignificant number of Sigma (SIGM) shares.

Marvell Technology Annual Shareholder Meeting (2010)

I attended Marvell Technology Group Ltd. (MRVL) annual shareholder meeting on July 8, 2010. I know many engineers (thank you, high school Chess Club), and whenever my engineer acquaintances discuss semiconductor companies, Marvell is mentioned in almost reverential tones. As a result, I was happy to be able to attend my first annual Marvell meeting, which took place at the Hyatt Hotel in downtown Santa Clara, California.

First, the food was wonderful. I appeared to be the only non-employee shareholder who attended, so I happily helped myself to Powerbars, yogurt, coffee, soda, mineral water, regular water, and fresh and dried fruit. Props to Hyatt Hotel for creating a great experience.

Prior to the meeting, I had watched an excellent documentary about America’s ascent to the moon, called In the Shadow of the Moon (2007). I was struck by the entire world’s rapt attention to America’s technological progress in the 1960’s. Today, although many Silicon Valley companies are generating major technological leaps and bounds, few laypeople follow such companies closely. It’s assumed that tech companies will continue to great the “next new thing," but such an assumption may be flawed. For example, NASA was able to propel America to the moon by using major taxpayer dollars and incentives. Perhaps the federal government's clean energy incentives will bear fruit eventually, but I still don't see Americans coming together on science and technology like they did during Kennedy's era.

In any case, Marvell didn’t look like it was used to having too many non-employee shareholders attend its annual meeting, but it graciously allowed me to ask a few questions and get some one-on-one time with the Chairman, President, and CEO Dr. Sehat Sutardja. Some interesting facts:

1. Marvell is “debt free and ended the year [fiscal 2010] with nearly $1.8 billion of cash” on its balance sheet.

2. Marvell’s founders continue to play significant roles. Dr. Sehat Sutardja (President CEO) is married to Weili Dai (VP of Sales) and is the older brother of Dr. Pantas Sutardja (CTO). Collectively, these three people own approximately 17% of Marvell’s outstanding common shares. (See 10K, page 31.)

3. For the year ended January 30, 2010, two customers accounted for a total of approximately 39% of Marvell’s net revenue. (See 10K, page 21.)

I noticed the customer concentration, so I asked how easily these top two customers could leave Marvell and go to a competitor. CEO Sutardja responded that Marvell’s products were highly differentiated, with numerous design wins, and Marvell works hard to make better products. He continued, saying that Marvell’s technology makes its customers successful, and when customers become successful, they become bigger. In short, we will be seeing “fewer but bigger customers in the long run,” which explains Marvell’s customer concentration. Dr. Sutardja also remarked that Marvell’s customers “can sleep well,” knowing that Marvell is doing everything it can to help make its customers successful.

I asked my usual question, “What do you see as your biggest challenges?” Dr. Sutardja remarked, “following Moore’s Law.” To summarize, the pace of modern technology is so fast, you must quickly innovate, or you will be left behind. While Coke and Pepsi can continue to rely on the same basic formula for decades, no technology company can stand still and expect to survive. As the CEO remarked, you can’t find a semiconductor company selling technology that’s ten years old. Basically, “if you sleep for 18 months, you are behind by a factor of 2, and if you sleep for 36 months, you are behind by a factor of 4.” In addition, newer generations of IC chips will have more circuits placed on them, making the IC chip design process increasing more complex. On the plus side, if a technology company is successful, other companies tend to buy products from companies with proven track records–another reason for Marvell’s success.

Disclosure: I own an insignificant number of Marvell (MRVL) shares.

Wislawa Szymborska

When the piranha strikes, it feels no shame.
If snakes had hands, they'd claim their hands were clean...

On this third planet of the sun
among the signs of savagery
a clear conscience is Number One.

-- Wislawa Szymborska

Barry Deutsch's Cartoons

Barry Deutsch has some very funny comics HERE. Be sure to check out the one about the different types of libertarians. I wonder which one I am...

Jack Paar on Flattery

"No matter what other nations may say about the United States, immigration is still the sincerest form of flattery." -- Jack Paar

VeriFone Annual Shareholder Meeting (2010)

VeriFone (PAY) held its 2010 annual shareholder meeting at company headquarters in San Jose, California. CEO Douglas Bergeron handled most of the meeting, but Senior VP and General Counsel Albert Liu also played a significant role.

The person manning the front desk offered only coffee to visiting shareholders, but we later found a small treasure trove of pastries, Egg-McMuffin-type sandwiches, and Odwalla juices on our own. (Note to VeriFone: if you're going to have food and drinks, have some class and offer some to non-employee shareholders--don't hide the goodies in the back. Also, the coffee was terrible. Sigh.)

I estimated that fourteen people attended the meeting, including just three non-employee shareholders. Prior to the meeting, one of the attendees mentioned that he recently traveled to Cleveland, Ohio and was very impressed with the city. Members of the Board of Directors praised Cleveland, calling it a hidden gem. (Personally, I believe LeBron James will stay in Cleveland, Ohio. If you read the book, Shooting Stars, it's hard to see LeBron James turning his back on Ohio.)

VeriFone didn't have an informal presentation, so we went directly to the Q&A session after the business portion of the meeting concluded. Some shareholders asked a few questions. One shareholder asked about payments/purchases via cell phone. CEO Bergeron responded that the security of cell-phone-payment transactions was currently "questionable." At the same time, VeriFone was working on a way of encrypting personal/financial data before it reaches the cell phone, making the transaction more secure.

I asked why international sales of System Solutions had lower gross margins than North American sales (see 10K, page 27). CEO Bergeron indicated that homogeneity leads to a premium. After the meeting, I asked him to clarify his answer, and he indicated that if you're trying to sell someone 10,000 machines for the first time, obviously the price will be lower versus a situation where you've already sold a company 100,000 machines. Why? I surmised that the more machines VeriFone sells to a particular company, the more the company benefits from scale. Thus, once a company allows VeriFone to set its payment standard, disengagement might be difficult, which gives VeriFone more pricing power.

All of the people attending the meeting were male, and, with the exception of one employee (Mr. Liu), all of the Verifone employees appeared to be at least 50 years old. I asked the CEO about his thoughts on diversity. He responded that VeriFone was open to diversity and recruits the "best and the brightest," which, in this case, happens to be "middle-aged, white" males.

Overall, VeriFone's meeting was short and simple.

Disclosure: I own an insignificant number of VeriFone (PAY) shares.

Homeland Security Coming to a Screen Near You?

The Department of Homeland Security is now pursuing people who download illegal movies. Why? Because they consider illegal downloads part of the war on terror. Yes, they are being serious. Civil-liberties-be-damned and mission-creep serious. More HERE.

“The reason the Department of Homeland Security is protecting Shrek is because we are all about protecting the homeland. We’re all about protecting American interests,” says John Morton, assistant secretary of DHS...“If you don’t think undermining Hollywood’s ability to produce a “Shrek,” undermining the creativity that goes into creating a “Shrek,” undermines the United States,” Morton says, “you are sadly mistaken.”

Who the heck pays these people? Oh, wait, we do. Sigh.

E.B. White and Independence

E.B. White: "I think the Court again heard clearly the simple theme that ennobles our Constitution: that no one shall be made to feel uncomfortable or unsafe because of nonconformity."

Happy 4th of July.

Mario's Story: My Highest Recommendation

Mario's Story (2007): "[E]ventually good triumphs, but before it triumphs, a lot of people have to suffer."

I highly recommend Mario's Story, about Mario Rocha, a man who was wrongfully imprisoned for murder.

Equinox Flower

From the Japanese film, Equinox Flower: "Then everyone's inconsistent. Everyone but God. Life is absurd. We're not all perfect. As a scholar said, 'The sum total of inconsistencies is life.'"

Reminds me of Walt Whitman:

Do I contradict myself?
Very well then I contradict myself,
(I am large, I contain multitudes.)

Immigration

Interesting piece on immigration, both legal and non-legal:

http://www.windypundit.com/archives/2010/05/so_what_if_its_illegal.html

Interesting Rankings of States and Countries

I can't believe I didn't discover these links sooner:

http://www.forbes.com/2010/01/20/global-debt-bomb-business-wall-street-debt-10_land.html

http://www.forbes.com/lists/2010/44/debt-10_Global-Debt-Crisis_Rank.html

http://www.forbes.com/2009/11/11/taxes-employment-government-business-beltway-tax-burdens.html

Beautiful statistics. And congrats to Utah for its fiscal responsibility.

Notes from a Legal Seminar

Some notes from a recent legal seminar:

Judge: "[Court] Trials are civilized combat."

An example of an opening statement to a jury: you've got the facts, the law, and your common sense.

Judge Conrad Rushing on CMCs:

1) Make every appearance count; and

2) Don't continue it out. [i.e., avoid continuances.]

California has a 95% settlement rate, i.e., 95% of cases in the state do not go to trial.

In mediation, if there is an impasse, ask the side that is refusing to budge the following questions:

1. What do you think the case is worth?

2. If they offered that much, how much would you counter with?

Not My Stock Picks

Apparently some other website--without my permission--took a list of stocks it believed I had, and created a list with performance numbers. See below:

NVDA +0.36% since 08/12/08
JMBA +140.61% since 08/04/08
GRMN -9.46% since 07/30/08
SO -7.16% since 07/30/08

For the record, I am not recommending any of the stocks mentioned above. As a rule, I do not recommend any stocks or stock market actions, so if you run across a stock list related to me, ignore it. I used to publicize some of my own stock purchases for informational purposes only, but I stopped doing it when I realized I was becoming too focused on short-term gains and losses.

The information on this site is provided for discussion purposes only. Under no circumstances do any statements here represent a recommendation to buy or sell securities or make any kind of an investment. You are responsible for your own due diligence. To summarize, I do not provide investment advice, nor do I make any claims or promises that any information here will lead to a profit, loss, or any other result.

Rumi's Poetry

However long your patience, I will shred it.

If you sleep, I'll steal the dreams from your eyes.
Stand like a mountain, I'll melt you in fire;
Be the sea, and I'll drink your water dry.

More from Rumi HERE.

Yahoo Annual Shareholder Meeting (2010)

I attended Yahoo's Annual Shareholder meeting on June 24, 2010 at the Doubletree Hotel in San Jose, California. About 35 non-employee shareholders and 50 Yahoo employees attended. What a change! No media circus, no hoopla about Icahn's or Microsoft's intentions, and no ill-advised grandstanding by Bostock--just a normal, professional annual meeting. In short, Carol Bartz is simply amazing. She has taken Yahoo from seemingly endless PR disasters to instant credibility. Even Bostock--whose dithering I despise--seems tolerable next to Bartz. In fact, "to dither"--which means, "to be nervously irresolute in acting or doing"--seemed to be Yahoo's motif before Bartz.

Bostock (pronounced, "Bah-stock") opened the meeting by introducing Yahoo's Board of Directors and Executive team. (I was happy to see Brad Smith, Intuit's CEO and Yahoo Board member, at the meeting. Intuit's consistent ability to deliver strong products makes it an excellent partner to have.) Bostock said that Bartz had acted "decisively" and the Yahoo team had "made enormous progress." He turned the podium over to Yahoo's general counsel, who handled the formal portion of the meeting.

Yahoo's general counsel did a fantastic job. After hearing Responsible Wealth's representative Lincoln Pain introduce a shareholder proposal ("Say on Pay"), Yahoo opened the floor for comments on the proposal, limiting statements to two minutes. Yahoo's approach to shareholder proposal comments creates a good balance between too much information and too little information. Too many companies won't allow shareholders to comment on proposals or go the other direction and allow shareholders unlimited time.

One shareholder did have a comment on the "Say on Pay" proposal. He said similar proposals had been used as a club/baton to harangue the Board and CEOs. He criticized RiskMetrics, Responsible Wealth (the organization sponsoring the proposal), and ended by saying, "If you own a house in the Bay Area, you're [considered] rich," and "Responsible Wealth is ACORN for rich people." This proposal was defeated.

After the general counsel concluded the business portion of the meeting, the meeting was adjourned, and Carol Bartz shooed the general counsel off the stage and began her presentation.

Bartz detailed Yahoo's partnership with Microsoft. She said that by working together, Yahoo and Microsoft could attract 30% of the marketplace for search (with Google attracting the other 65 to 70%). Bartz indicated that Yahoo was focusing on several main areas: local, social, video, and mobile. She praised Yahoo's longevity, reminding us that while most tech companies founded fifteen years ago are now gone, Yahoo is still here. After a simple, crisp presentation, she opened the floor for Q&A.

Shareholder Anthony Mezzapelle mentioned that Yahoo's operating profit margin in the past three to five years seemed too low and wondered why Yahoo wasn't using its ample cash to improve its margins. Ms. Bartz answered that Yahoo had about $4 billion in cash, and agreed that Yahoo's 6% operating margin was "shockingly low." She said that Yahoo has spent money trying to improve margins, but revenue did not follow. Bartz seemed confident that Yahoo's margins would improve in the future. Ads are supposed to be fun, Bartz said, and Yahoo has better ads than competitors; moreover, Yahoo's partnership with Microsoft was generating more eyeballs and traffic for Yahoo's advertisers. Thus, while the advertising marketplace was fragmented, that fragmentation represents opportunity for Yahoo, according to Bartz.

Victor Anthony Cruz, representing Amnesty International, reminded Yahoo about Shi Tao, who is serving a ten-year sentence in China for voicing dissent in cyberspace. (See here for more on Shi Tao.) Cruz indicated that Yahoo's discomfort over the China issue pales in comparison to the prisoners' feelings, and Yahoo should be more active in calling for their release. Bartz responded by saying that Yahoo had "actively" called for Shi Tao's release and worked with the State Department to try to help Shi Tao. She reminded Cruz that Yahoo "can't do a jailbreak." She also said that Yahoo has not directly operated in China for years and would not be happy until Shi Tao was released.

Another shareholder discussed Yahoo's poorly timed share buybacks. He noted that Yahoo's average share buyback price was $26.35/share, and Yahoo bought much of its shares in 2007. Bartz said that buybacks should be analyzed over a period of 20 years. "Hindsight is perfect," she said, but Yahoo made the best decision at the time based on the information it had. Also, Yahoo was reviewing its buyback formula.

Other shareholders asked about Yahoo's foreign stakes. One shareholder asked if Yahoo would be returning some of Alibaba.com's value to shareholders. (Yahoo owns a stake in Alibaba.com and has a joint venture with Yahoo Japan.) Bartz responded that Yahoo had no plans to sell its Japan stake and would figure out how to monetize it over time. Bartz also told another shareholder that Yahoo had no operational control over Alibaba.com but was aware of the issues relating to Chinese monitoring relating to the website.

I made several comments, and opened by praising Ms. Bartz tenure at Yahoo. I said I was generally against high executive compensation, but in this case, she deserved every penny she got. She laughed, and responded that her compensation wasn't $47 million--the number most people throw out when discussing her package--and the share price would have to "triple" before she actually received that much money.

I then offered some suggestions. I told Yahoo that its online calendaring system had numerous glitches. Several months ago, Yahoo changed its calendaring system, creating several problems. For example, times set to repeat had suddenly changed, and some days at the bottom of the calendar could not be opened. I suggested whoever was in charge of the calendaring "needed a talking to," and the inability to handle a calendaring system affected Yahoo's credibility.

I then expressed an ongoing concern about Yahoo's choice of homepage content. I am sick of hearing about Hollywood "stars" and their personal lives. It bothers me that I actually know Kim Kardashian has a new boyfriend (thanks, Yahoo). It bothered me when Yahoo kept displaying stories about OctoMom, Paris Hilton, etc. (at this point, Bartz chimed in, mentioning Britney Spears and Kate and 8). I said I despised such stories so much that I had changed my homepage to something non-Yahoo. This comment set up an awkward exchange, where Bartz asked me what homepage I was using now. After some hesitation (hey, she asked), I answered, "Google"--causing several disgusted reactions in the room.

I also mentioned concerns with Yahoo's automatic updating and user sharing process. Right now, unless you opt out, whenever you make a comment on a Yahoo news story, your comment is displayed to your friends/contacts. In fact, I had no idea that some of my posts were being shared with my friends/contacts until someone mentioned a comment I'd made on a story weeks ago. Also, I had no idea that my actions on Yahoo would be shared without my consent. I immediately deleted my Contacts list and did the best I could to prevent my information from being shared. Nevertheless, Yahoo lost credibility by failing to have an opt-in social media system rather than an opt-out social media system.

Moreover, it was surprising to see Yahoo so behind the curve when it comes to privacy. When I post something on Facebook, I know I am sharing my comment with my Facebook friends. In contrast, just because I use Yahoo doesn't mean I expect my comments and user activity to be shared with my entire Contacts list, which could include people who've emailed me only a few times or many years ago. Although I criticize Yahoo for failing to foresee these privacy problems, I am still a Yahoo user. Overall, Yahoo gives me much more than it takes.

Finally, I jokingly asked Bartz when she was planning on going into politics (Meg Whitman and Carly Fiorina seem to be setting a trend for Silicon Valley female CEOs). Bartz immediately responded, "Never."

Congrats to Bartz for bringing some much-needed gusto to Yahoo.

Disclosure: I own an insignificant number of Yahoo (YHOO) shares.

Charles Kesler on the New Liberals

Charles Kesler delivers an interesting take on the new liberalism in Imprimis' May/June 2010 edition:

FDR's New Deal implied that there's nothing to fear from making government bigger and bigger, because political tyranny—at least among advanced nations—is a thing of the past. In truth, however, the new socio-economic rights were group rights, not individual rights. They were rights for organized interests: labor unions, farmers, school teachers, old people, blacks, sick people, and so forth. Collectively, these rights encouraged citizens to think of themselves as members of pressure groups or to organize themselves into pressure groups. Subtly and not so subtly, citizens were taught to identify their rights with group self-interests of one kind or another...These new group rights were conspicuously not attached to obligations.

The new rights pointed to a kind of moral anarchy in which rights without obligations became the currency of the realm—in which rights, understood as putative claims on resources, were effectively limited only by other, stronger such claims. The result was, at best, an equilibrium of countervailing power....Liberalism in these terms is just a preference.

Basically, Kesler sees modern-day liberals favoring freedom without morality and duty. He believes such a path leads to moral relativism and a slow erosion of individual rights.

Thomas Jefferson on Restraint

"Let us hear no more of confidence in men but bind them with the chains of the Constitution." -- Thomas Jefferson

Immigration: Does it Cost Americans Jobs?

"Immigrant workers 'create almost as many' jobs as they occupy, 'and maybe more,' said Madeleine Sumption, policy analyst at the nonpartisan Migration Policy Institute. See here for more:

http://www.factcheck.org/2010/05/does-immigration-cost-jobs/

I am, however, willing to concede that immigrants take jobs from native-born American teenagers.