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Why not make iPhones in the United States?

Apple employs about 25,000 Americans from sea to shining sea. That sounds pretty good until you consider that the iPod/iPhone/iPad revolution has created some 250,000 jobs in China. Here’s a modest proposal: bring those manufacturing jobs home, Apple. What would happen?

The Good News

1. 250,000 jobs! But not just any 250,000 jobs; specifically 250,000 solid jobs for lower skilled and/or undereducated adult Americans. Welcome back to middle class America, folks! Yes, we need white collar job growth too. But, the blue collar crowd has been neglected for so long that its on the endangered species list.

2. Reduce the U.S. Trade Deficit. According to a study put out by the ADB Institute back in 2009, the iPhone is responsible for adding 1.9 billion dollars to our annual trade deficit because its made in China.

3. Apple is the biggest tech company on earth now.

It is not just a leader. It is the leader; beloved, feared and admired not only for its killer products, but its killer business acumen.

If Apple did something bold like move its manufacturing to the States, others would surely follow.

The Bad News

1. I bet you’re wondering; just how much would a U.S. made iPhone cost? That’s always the argument against these kinds of wide-eyed fantasies. That same study by ADB actually crunched the numbers and has an answer. It would cost Apple about $240 to make an iPhone here.

As the study suggests, a $500 iPhone would still give Apple a 50% profit margin. Would you pay $500 for a U.S. made iPhone?

Former Intel CEO, Andy Grove, wrote a great piece making a case for American businesses to make domestic employment a priority. Here it is.

Wireless Power: Has The Time Come?

Tesla: Reading in the Light of Wireless Power at Pike’s Peak, Colorado, 1899

We fill the fuel tanks of our cars, aircraft and ships with refined oil and then breathe the smoke from these transporters as they burn dirty hydro-carbons along with many toxic chemicals, including some known to cause cancer. Not only that, but when the “black gold” is extracted from deep underneath the sea, we can get the Gulf of Mexico toxic gusher which we can’t seem to stop.

Did Nikola Tesla (1856-1943) — the famous inventor of the alternating current power system deployed worldwide — have the answer?

With the discovery of electricity, everybody expected that all cars would be electric and run on rechargeable batteries. Tesla had gone one step further and actually produced a working automobile that ran on electricity taken from the surrounding air like an antenna picks up radio waves. This would revolutionize travel just like his AC induction motor had fundamentally altered the industrial world.

John Pierpont Morgan, John D. Rockefeller, and Henry Ford were not pleased with Tesla’s wireless power travel solutions. No gasoline engine meant no oil monopoly for the Rockefellers. Their Standard Oil Company was losing its key market of home lighting to Thomas Alva Edison’s electric light bulb.

The legendary investor and banker JP Morgan did not like the idea of wireless energy based travel — road, air or sea — because where would one put the meter to charge? He favored the joint solution of Rockefeller’s Standard Oil and Ford’s modern car based on the internal combustion engine for its clear income stream!Although there is some skepticism surrounding Tesla’s work in wireless power, there is no doubt that he was a towering figure responsible for many key advances that enable the modern electric world.

Shouldn’t we revisit applications of Tesla’s wireless power solutions? As we find ourselves surrounded by 21st century intractable challenges, there is a need to reconsider some of his seminal thinking in wireless power generation and transmission.

We need to incorporate those ideas, systems and solutions into the innovation which humanity collectively seeks for the age beyond oil. Unless we are able to increase energy efficiency during transmission and utilize the power already generated, it is difficult to envisage how we may slowly begin to wean ourselves away from massive oil dependency.

There can be no doubt that there are some vital answers lurking in the closet marked Tesla. This time around, with modern computing technology solutions at our disposal, wireless power might make even more commercial sense whilst reducing our dependence on oil at the same time.

Show Me the Deal

FRANK: The opportunities come as people start to really feel pain. There’s still shock, but I don’t think the actual pain has really set in. I think there will be good deals come this fall? It’s like a sneeze. It’s still getting there.

ANGLES: But isn’t this broad-based downturn so much different than the last one? Then, people were saying the Internet was over. Internet advertising was a fraud. No one’s saying that now.

FRANK: That was really a stock downturn. Everybody’s stocks were in the toilet and no one could get free money any more for your Pets.coms. It was just a stock play, all driven by The Greater Fool. That was then. In some respects, that is replaying now. People are not in a rush to spend, and I don’t think it’s going to snap back.  It’s harder for people to raise money.

Unless the Dow goes back to 14,000, which it won’t, people will start to realize, by this fall, that this stuff is not bouncing back. The economy is not going well, and we’re going to see some serious panic selling set in and it’s going to create huge opportunity.

ANGLES: So what should people do?

FRANK: The name of the game right now is to keep your cash close. So if you’ve got cash and a good opportunity comes along, you can go for it. Look for distressed situations. But for now, save. There will come a time to spend, based on the prices that I’m seeing.

ANGLES: Isn’t one reason that prices of domains are not aligned with the economy because, no matter how hard people try, there’s not a liquid aftermarket?

FRANK: Exactly. And that’s a blessing and a curse. You can go in and buy names way below true value because not everyone knows about it. On the other hand, there’s no liquidity and names go for too much.

ANGLES: Have you been buying many names?

FRANK: We’ve been buying names the whole way. We’re buying a lot less now then we used to. We saw Gocart.com come down the chute a while back and we were hemming and hawing, should we? We came up with a sensible number and it went for three times that, over $90,000.

ANGLES: Wow.

FRANK: Right. And it’s not just gocarts.com. It’s everywhere right now.

ANGLES: Fair enough, but isn’t it in your best interest to say domains are expensive now? Whereas a few of years ago, when VCs and big money guys were prowling in the space, it was in your advantage to talk about how much names are worth?

FRANK: That statement is true, but I never felt that good “talking my own book,” because firstly people see through that, and, secondly, I’d feel terrible if somebody reads something I write, acts on it and fails. Total bad karma.

The truth is that today, while plenty of people expect way too much, some names are valued fairly, and others are cheap. But collections of portfolios still sell at a fairly large discount to intrinsic value because there are very few people who can hold each name to the light and correctly assign a fair value to each, so the PPC value of the collection becomes it’s default value (it meets GAAP rules and seems sensible) but that massively undersells the break-up value of most portfolios.  The breakup value flows to the buyer for free.

ANGLES: But who’s buying giant portfolios these days?

FRANK: Nobody. A great deal of this is moot because there are no corporate or equity buyers today—when most of the publishing world and corporate-America and the equity and investment shops are trying to keep their head above water and survive the worst global downturn in 80 years.

ANGLES: But isn’t that shortsighted? Don’t we all now know and accept that more advertising is migrating to the Web and that prices and payouts are just that things are down because the economy is a mess?

FRANK: That’s true. And you have a dominant marketplace, Google, which performs exceedingly well and could pay out much more. The next nearest market place, Yahoo, cannot pay out as well. Google knows that, so it pays out a lot less than it could, and so that’s just the way it is.

What you need is a disruptive force – or a series of disruptive forces – to come along and create another ad market place and create some competition. You can’t have a marketplace where the entire domain world is parked on Yahoo and Google and the power rests with the publisher, but that’s what we have.

13. Isn’t part of the problem that, in so many cases, there’s really no way to value a name in so many cases? That it’s really not like real estate because so often comps don’t exist?

FRANK: Yes but real-world comps exist. Take any name—and I’m pulling this out of the air—“Hair Styles” (actually, my wife just suggested it). There may be ZERO comparables for hair and hairstyle related names, but we know that a cut costs $15 at Supercuts and $600 at the Christophe Salon in Beverly Hills, then I know that products range from $15 to $100s, I know that a monthly rent or an ad in a national magazine can cost thousands or tens of thousands, so with that sort of back-of-the-envelop-thinking, and without much effort, I can set a floor of ten or twenty thousand dollars for the name.

That’s a price I’d consider paying, that would make it worthwhile to part with the cash and carry the name.

Then you have external factors such as competitors and other hair companies who may be willing to buy the name and relatively quickly you can see how something with no obvious comparables can still have a high market value.

There are always traffic that the name gets but we rarely actually price these into the value of the name. Traffic is just the bonus for owning the name.

Better Times Are Coming?

By Eric Martin and Lynn Thomasson

April 10 (Bloomberg) — U.S. stocks rose for a fifth week, capping the steepest rally since 1933, as Wells Fargo & Co.’s higher-than-estimated earnings and speculation banks will pass government stress tests spurred optimism that the industry’s slump is ending.

Bank of America Corp., American Express Co. and JPMorgan Chase & Co. helped drive a gauge of 80 financial companies in the Standard & Poor’s 500 Index to a 9.4 percent advance. Wells Fargo surged 20 percent after reporting record first-quarter profit. Lincoln National Corp. and Principal Financial Group Inc. jumped at least 37 percent as the Treasury considered bailouts for life insurers.

“This was a really, really positive start to the earnings season,” Hugh Johnson, who oversees $750 million as chairman of Johnson Illington Advisors in Albany, New York, told Bloomberg Television. “Banks are not going to be forced to take the kind of write-offs they had to take in prior quarters.”

The S&P 500 gained 1.7 percent to 856.56. It has soared 27 percent since March 9, the most in 23 days since the Great Depression, according to Howard Silverblatt, an analyst at S&P. The Dow Jones Industrial Average added 0.8 percent to 8,083.38 this week. U.S. exchanges are closed today for Good Friday.

The highest U.S. unemployment since 1983 has forced consumers to restrain spending. The number of Americans filing first-time claims for unemployment insurance exceeded 600,000 for a 10th straight week. The total collecting benefits rose to a record in a sign that the labor market remains weak.

Obama Says Present Financial Crisis is Great Opportunity

WASHINGTON (AP) — President Barack Obama on Saturday challenged his country to see its hard times as a chance to “discover great opportunity in the midst of great crisis.”

“That is what we can do and must do today. And I am absolutely confident that is what we will do,” Obama said in his weekly radio and video address, taped a day earlier at the White House.

As the White House takes on so many huge issues at once, Obama is encouraging people to take a longer view, and not get caught up in the fits and starts. The president said in his address that the nation will continue to face difficult days in the months ahead. Still, he ended with hope.

“Yes, this is a moment of challenge for our country,” Obama said. “But we’ve experienced great trials before. And with every test, each generation has found the capacity to not only endure, but to prosper — to discover great opportunity in the midst of great crisis.”