Archives for posts with tag: Tesla

Linkedin just had an article about the best places to work today. The usual suspects are listed: Google,  Facebook and Amazon and some newer, and surprising  ones to me,  Uber (lots of bad press and legal issues)  and Tesla (who makes no profits and may run out of money, not gas.)

But was really struck me was how few of the top companies even existed 25 let alone 10 years ago! The ones that remain have changed a lot: Time Warner (magazines to cable), JPMorgan (a dozen mergers later started as Chemical Bank) and Disney which looks like it may be around forever and never age like Mickey Mouse!

Fortune magazine had an article that stated that 88% of their 500 largest firms from the 1950’s are gone and predicted that 40% of today’s largest firms will be gone in 10 years.

Since I constantly advise graduates and young people where to work, this got me thinking. People used to get a job right out of college and then retire there 40 years later with a good pension. None of this is true today for millennials.

In my book, I stressed that as one moves up in their careers, they needed to study beforehand the leadership and culture of the next company they wanted to work for to try to gauge their personal fit and thus improve the chance to succeed. Now I believe that even graduates and young working people need to do this plus reading all they can about their targeted potential employer. What is their overall strategy, how sophisticated are they on technology and social media, are they well financed? And is their own business model sustainable or will they be the next industry subject to what we increasingly call disruptive innovation, like Uber to taxicabs?

Even though young graduates may work for a half dozen or more organizations in their career, they need to try to look down the road to try to figure out if their next employer will even be around! I believe this new group of millennials are better equipped and more comfortable, than my generation ever was, to research and analyze all the available, on-line information that now.  After all it is their future world. This may also be one of those few areas where most well meaning parents are just not able to help. Looking for your first job or your next job has always been difficult and in this rapidly changing world it just got harder!

In the category of just when you seen it all! No, not Britain voting to leave the European Union. But that news headline seemed to have taken this one off the main pages of the Wall Street Journal.

I am referring to one of the most fascinating people of our day. No, not Donald Trump. I am talking about Elon Musk. He may be a bigger Dealmaker than Trump if he can pull off his latest idea. Mr. Musk has proposed that his Tesla controlled company buy, at a big premium, his solar panel controlled company.

The “facts” if you can call these worthwhile facts are as follows:

-Tesla, the electric car company, has never made a profit even though it receives huge direct and indirect government subsidies  and  currently “sells” their cars for close to $100,000 each. Tesla is not expected to be profitable until 2020 at the earliest but has a market value of $32 billion, because some people love Mr. Musk. Tesla is thus worth more than General Motors and a lot of other longtime firms who make profits.

-The Solar panel company, Solar City, has never made a profit even though it receives huge direct and indirect government subsidies as well. The company lost $283 million during the first three months of this year alone. The synergy of merging these two firms and any resulting increased valuation have not been fully explained to date. Electric cars and solar panels, you never know.

-Both firms have sold tons of stock or debt to finance their losses and activities. Tesla just sold $1.7 billion of its stock and is spending $5 billion to build a new battery factory. Solar City, in 2014, sold $214 million in bonds, the largest buyer of which was Mr. Musk’s controlled space exploration firm, Space X. Mr. Musk has lent his own money to these firms, over the years ,and right now has a roughly half a billion dollar personal line of credit secured by his various companies’ stock. Always a complex legal and financing arrangement.

-The Chairman of Solar City is a first cousin to Elon Musk. Neither of them will personally “vote” for the merger but are both very supportive of it getting done as are some other cousins and relatives.

Now if these were private firms, I say fine, hopefully the lenders understand the risks. But these are all public firms that Mr. Musk “controls” with various ownership percents which overall are around 25%. Over the years he has reduced his ownership through public offerings of stock. So there is a lot of other people’s money involved in this rotating shell game. Some large investors, like Fidelity, have endorsed this merger. Fidelity owns a chuck of both firms and Space X as well.

Who will make money on this merger? Elon Musk, his cousin and his family, it is reported, could have a windfall of just under a billion dollars.

All I know is that in big deals, whether its Donald Trump or Elon Musk, the Dealmakers usually come out alright. If you own the stock or debt or one of these entities you may have to wait another decade or two to know if you made money. By then, one financial writer, noted Elon Musk could be living on Mars courtesy of one of his firm’s space rockets!