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The Biz Roundup January 15

That’s your $350 billion dollars, folks.

On a vote of 52 to 42, the Senate defeated a resolution that would have blocked the second half of the money from a $700 billion financial rescue program from flowing to the U.S. Treasury Department.

(“Senate Votes to Release Second Half of TARP Funds,” Washington Post, January 15) To celebrate the occasion, read around in Pietro Verenesi’s and Luigi Zingales’s, Paulson’s Gift, to see how much of the first quarter of the bailout simply went to debt holders. Then drink a bottle of champagne. No, seriously. The whole bottle.

That’s my bank! Whew!

JPMorgan Chase narrowly avoided a loss in the fourth quarter, indicating that it is weathering the financial crisis better than some of the other big banks. . . .

Chief Executive Jamie Dimon called the quarter “very disappointing.” Results were hurt by $2.9 billion in markdowns in JPMorgan’s investment bank, and deterioration in various types of loans — from mortgages to home equity loans to credit cards to commercial real estate loans.

(“JPMorgan posts profit, but ‘disappointing’ one,” Los Angeles Times, January 15) Let’s be clear on one thing, folks: any bank making any profit is not “disappointing.” Well, maybe, since $1.1 billion of the $700 million profit was a one-time event due to their acquisition of WaMu. Okay, disappointing, but black ink is black ink.

Maybe this will mean they’ll skip the sequel to Catch Me If You Can.

With a charity he supported already stung in the alleged Ponzi scheme run by money manager Bernard Madoff, the director of the “Indiana Jones” movies is being forced to dig into his bank account to fund moviemaking because of delayed financing.

On Thursday, Spielberg had to pay Viacom Inc.’s Paramount Pictures $13.3 million, or half a $26.5 million price tag, to buy the rights to 17 movie projects that were in development while his DreamWorks SKG studio was at Paramount . . .

Funding delays have meant Spielberg has also had to cover half the costs of DreamWorks’ approximately 60 employees since the production company broke off from Paramount in October . . .

(“Spielberg forced to dip into bank account,” San Francisco Chronicle, January 15)As someone who works for independent producers developing investor packages and marketing strategies, I could write half a book on this issue. Two things you need to understand what’s going on with Dreamworks and the industry in general: first, the problem with Dreamworks has always been its lack of a library. All the other studios are able to finance studio operations off the revenues of their considerable film libraries. DreamWorks, a studio with one of the best hit records in the industry, still doesn’t generate that much revenue off its library. The second is that film and studio financing is a catch-as-catch-can, chaotic affair, because films are not in any sense of the word rational investments. So it’s hard in the best of times to get people with money to give up their hard-earned (or hard-inherited) bucks for what amounts to this-side-of-insane investment.

Apple gets smart and wants us to know that there are other employees at Apple besides Steve Jobs.

. . . there’s every reason to believe that Apple would at least be stable for some years to come if Cook were to find himself at the helm. The reason: He’s essentially been running much of the company for years.

Think of Cook’s contribution like this. There are two basic ways to get great profit margins: Charge high prices or reduce costs. Apple does both. The marketing and design drive consumers wild with desire and make them willing to pay a premium; Cook’s operational savvy keeps costs under control. Thus Apple is a cash-generating machine. Cook has called the company a place that is “entrepreneurial in its nature but with the mother of all balance sheets.” At last count that meant $24.5 billion in cash and no debt. . . .

“Operationally, when you think about what they’ve done – a massive retail-stores ramp, an expanded sales-channel presence, delivering new products without glitches, and managing huge seasonality – all speak to a company that is exceedingly well run,” says Sacconaghi, the Sanford Bernstein analyst, referring almost wholly to aspects of the company that Cook oversees.

(“The genius behind Steve Jobs,” Fortune, January 15) And Steve Jobs in the last six months felt it would be a good idea to start introducing Cook to Wall Street. If anyone thinks Apple can’t run at the same level of excellence without Steve Jobs, they need to read this article all the way through.

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