Data Centers Crucial To Lehman Sale 301
miller60 writes "What assets retain value in the midst of a financial panic? Data centers. When assets of bankrupt Lehman Brothers were sold to Barclays Tuesday for $1.75 billion, Lehman's data centers and headquarters accounted for $1.5 billion of the value in the deal. That echoes the JPMorgan-Bear Stearns fire sale, in which Bear's two data centers and HQ represented much of the sale price. Amidst financial turmoil, Wall Street's high-tech data centers become the crown jewels for buyers of distressed assets."
It's all about the data (Score:3, Insightful)
Programs come and go. Information is timeless and valuable.
Suprising? (Score:5, Insightful)
You know what else retains value in the midst of a financial panic? Skyscrapers.
Anytime you have physical assets, you have value. Especially if those physical assets are in continuing demand. (Which data centers are in particular, because the Technology sector is doing quite well right now.)
The only difference is that companies rarely own their own spaces anymore. They sold them off to realty companies long ago, because they didn't want to be in the real-estate business. This sort of sell/lease arrangement is almost certain to become common with data centers in the future. CoLos are already the standard of the industry, and are going to take over increasing amounts of large corporate business in the future.
Not surprising, but not really about data centers (Score:5, Insightful)
Re:It's all about the data (Score:5, Insightful)
At least, it would have been if I'd had a brain.
OK, since my name's out I'll finish the job. The operations are most likely valuable, as are the apps running in there. However, come merger and consolidation time merely having those centres around is a tremendous advantage. These things cost serious amounts of cash, and the electronic transaction volumes are growing all the time - yes, even now. So the raw existence of a pre-equipped building is the thing, not necessarily the data files within it.
Cheers,
Ian
Re:It's all about the data (Score:5, Insightful)
And let's not forget the multi-gigawatt generators, the fail-over system, the trained staff, the fire suppression systems, the network infrastructure, the secured access, etc., etc., etc.
The actual servers in the racks are the LEAST valuable part of a good data center. They're also the highest depreciating.
Re:Asset valuation programmer seeks job (Score:4, Insightful)
Companies enabling idiots to buy things they can't afford have their own assets siezed and sold for cheap.
Poetic Justice(tm)
Re:Not surprising, but not really about data cente (Score:3, Insightful)
Real estate: billions
Data centers: couple million
Re:Suprising? (Score:3, Insightful)
I am not, however, referring to money.
Re:It's all about the data (Score:5, Insightful)
Information is timeless and valuable.
I just can't agree with this. When something is timeless that means that it does not age. But information does age. Virtually all information ages; all information relating to human affairs certainly does. The aging of information can be measured not merely in whether it is forgotten, or known, but in how it is considered. Remember: we can still watch the original series of Knight Rider on re-run channels. This does not mean it is 'timeless'. It would be too polite to call it anachronistic.
Even for example the information we have about the collapse of Lehman.
Two weeks ago that information would have been worth billions.
Now it is common knowledge, and the details must be investigated, after the fact.
In twenty years it will be of historical interest, taught in economics classes.
In a thousand years it may have been forgotten.
The very fact that we have already seen different states of this information over two weeks means that it is not timeless.
Re:Asset valuation programmer seeks job (Score:5, Insightful)
Nice. I'm sure this whole mess boild down to 'idiots buying houses they can't afford' and the companies who enable them.
No, I'm sure no normal people got hurt in this mess, only bad, dumb people or greedy people who deserved it. I'm sure no first time home owning, hard working parents with dreams of getting out of the ghetto were suckered into ARMS that would screw them over at the first downturn. Nope. Couldn't happen.
I'm sure no one with a job they thought was secure got laid off and found their finances spiraling out of control, then found themselves and their kids living in their car. Nope. Not in America.
Have a heart, man. Don't try to make reality fit your worldview that everything is fair, hard work is always rewarded, and only bad people have bad things happen to them. People are born with compassion and empathy circuits in our brain for a reason, and those that don't have them or can't use them are seriously handicapped.
There's a difference between 'dumb' and 'trusting' (Score:5, Insightful)
Also, a difference between 'dumb' and 'uneducated about financial matters.' Is there a class on ARMS in high school people can take? I don't think those are covered in home ec.
People can't be experts on every field. Add to that fact that finances bring up survival fears in most people, and fear shuts down the brain, and you will see that many people may be smart in many areas, but uneducated about finance.
So people have to trust the experts they hire to do right by them. When those experts say, "Hey, you can own a house now and save that money you were putting into rent. Don't read the fine print, it's boring and it doesn't matter," people trust those experts. And they were misled.
Finally, I know you probably agree with me but I have to point it out: dumb people do not DESERVE to be taken advantage of by smart people. Social Darwinism is an inherently fascist, evil, and anti-social philosophy that destroys societies and people's lives. Don't subscribe to it. Society works because of trust, and social Darwinism destroys that trust.
Re:There's a difference between 'dumb' and 'trusti (Score:5, Insightful)
I have to point it out: dumb people do not DESERVE to be taken advantage of by smart people. Social Darwinism is an inherently fascist, evil, and anti-social philosophy that destroys societies and people's lives. Don't subscribe to it. Society works because of trust, and social Darwinism destroys that trust.
Quoted because it deserved to be posted twice.
Re:Asset valuation programmer seeks job (Score:4, Insightful)
Problem is, the entire global economy is affected when the US is in a recession. ...and most of us cringed when we saw that you reelected Bush
Re:Asset valuation programmer seeks job (Score:5, Insightful)
"We owe it all to the bedrock of our economy: the ordinary hard-working taxpayer. You resisted the siren call of credit cards, lived within your means to save for a rainy day, never took out an interest-only mortgage, credit score to make Jesus cry. Without taking every penny you saved over the $100,000 guarantee, we'd never have made it. And the best bit is, we know you'll still vote Republican! [today.com] God bless you all!"
Re:There's a difference between 'dumb' and 'trusti (Score:5, Insightful)
No, you're mixing two separate things up. If you don't understand ARMs that doesn't make you dumb. But if you then buy one and you don't understand them, that definitely makes you dumb. What the hell?! A mortgage is a huge commitment. You're going to be paying it back for a long, long time. If somebody commits to a huge thing, turns around and says "Oops! I guess I can't deal with this after all. It was scary and my brain shut down" then I don't see why they are deserving of much sympathy.
No, they were stupid. The risks involved with large debts are enormous. This is way different than being misled by a second hand car salesman and buying a SUV with poor mileage. This is a vast sum of money. If there's one time in your life you read the boring fine print and think about it really hard, it's when taking out a gigantic loan.
Now this I do agree with. However trust can cross a line into blindness. Somebody who does whatever they're told without considering the consequences eventually crosses the line from being a poor innocent misled person into something else - a liability to society.
Re:Asset valuation programmer seeks job (Score:2, Insightful)
To be fair, some of the causes of this crisis go back decades. You can't pin quite everything on Bush - just a lot of it.
Here's hoping we'll make ourselves an energy policy and get working on that current accounts deficit finally.
Re:All the banks are valueless. (Score:3, Insightful)
If you think your house isn't worth anything I'd be happy to buy it for twice that price
Re:There's a difference between 'dumb' and 'trusti (Score:1, Insightful)
Those aren't "experts," they're "salespeople." An expert would be someone you pay to read the fine print and explain it to you. They work for you. A sales person works for the place that is trying to tell you something. This is not specific to the financial arena.
Re:Disgusting (Score:4, Insightful)
Picking up the spoils of a catastrophe they were instrumental in causing. What a bunch of dicks.
They weren't instrumental in causing it. They just chose not to rescue them out of fear of the damage that lehman's debt could cause barclays. And they had good reason. There was no way to evaluate the risk level or value of lehman's toxic debt. Their actions were just good business.
Re:Disgusting (Score:3, Insightful)
There is nothing disgusting about that. That is just business. Lets use a car analogy. Last month you were talking to someone about buying their car. It was worth $5000 but they still owed $6000 on it. They offered to let you have it if you took over the loan payments. You declined. Today the bank has repossessed the car and is offering it for $3000. There is nothing disgusting about you buying the car at that $3000. This just happened faster.
Re:Asset valuation programmer seeks job (Score:3, Insightful)
The US economy affects the world, but it's much more significant in this case than it should be...
The entire global economy is MUCH WORSE off than if they were just dealing with a US recession. This is because banks (and mutual funds, and other investors) around the world were foolish enough to blindly buy up sub-prime mortgages. Governments around the world were silent as both private and public institutions took-up such risky investments as well.
Bush most certainly didn't force them to do so. You get to take a good share of the blame, yourselves.
Re:Asset valuation programmer seeks job (Score:3, Insightful)
Of course it doesn't help that my own government has also mismanaged what little power it had, but I'm not taking the blame for mistakes made by the American electorate.
Now do some of the more insular slashdotters out there understand why the rest of the world has an opinion on who should be the next president? It's not "interfering" in US internal affairs, but self-preservation. What happens in the USA has a direct impact on my wallet. I've seen parts of my savings shrink* because of US subprime mortgages. Thanks for the great choice of presidents\congresses guys.
*having said that; if you've got cash, now's a good time to buy if you can afford to wait a year or two to get profits.
Re:god bless ninja loans (Score:3, Insightful)
Good for you, unfortunately many people when given the ability to spend way beyond thier means by the dodgy mortgage brokers did so. Of course in many areas housing is in limited supply so more money availible to borrow just means prices go up meaning even more people end up taking out loans that they can't really afford.
Now there has been a massive bust and the feds have to work out how to deal with it without destroying the rest of the US economy and possiblly several other countries economies too.
Re:There's a difference between 'dumb' and 'trusti (Score:3, Insightful)
I'm not a mortgage broker, nor a banker, but this is how *I* approached buying a house:
- I spend $40 on a 'first-time homeowner's class'. Worth 10 times that. I learned about PITI, interest rates, amortization schedules, and had a memorable class (1 of 8) with a Realtor who warned us that real estate brokers were not our friends, and Realtors were the best of the bunch (something to do with the name and ethical promises that they broke less often than merely licensed brokers) and we should watch THEM just as carefully. He was right, except for my first broker.
- Assisted my GF in 2001 in buying her first house. Read the loan documents several times, and then explained to her in English what they meant. check the interest rate (fixed), the schedule of payments (all the same except for the last one, about $5 off) and the general terms (no balloons, no adjustments, nothing wierd). She still has the house, and is damned lucky. It didn't work out between us, but that's not the point of this little ditty. I easily spent 10-15 hours understanding the load, being my first, and focusing on much stuff that isn't important like state law regarding defaults, boilerplate about terms and conditions, etc.
- Assisted my wife in both selling 2 houses and buying another. The sales were painful, since one had to be completed after we moved cross-country. But done. Again, in buying, we got a NINJA loan, and again I read everything and explained it in English - fixed rate, level payments, no tricky stuff. The first loan we got presented to us was an 80/20, ARM, IO. this was in Phoenix in 2005, the height of the market here. We had plenty of down payment, didn't want an ARM, and didn't need interest-only, since we were buying an income property to hold. Told the broker the next time she pulled that we would be looking elsewhere. No problem, no more jokes, we got it. Probably spend 4 hours reading over the loan, now knowing what was important and what could be deferred.
- A year later, we refinanced, to change the interest rate. Again, going over the documents, same drill. This time, I paid extra-close attention, being a refi, and ti did take three tries to get various stuff right, like avoiding PMI since we had 30%+ equity, and still they screwed up the escrow afterwards.
I can see where a first-time buyer could easily look at a house, hear about deals, call a broker, get hooked up with their 'mortgage guy', and shown a loan for so little money that they have to buy, it's "cheaper than renting"! Never look at the details, never see a payment amount 3x what they thought it would be in a few years, and yeah, when the statemnet comes in and their $1150 payment turns into $3700, they probably soil themselves. And can't figure out how it happened. And call the bank and ask what error they made, and find out they were scammed. Do they hope for a handout from the government? I bet many do. By this standard, we would be spending a LOT of money bailing out people who were scammed. Sadly, while I sympathize, buying a house is the biggest transaction most people ever make in their lives. And many spend more time choosing their next party dress or table saw than they do checking their next mortgage.
My front tenant went through a different travail. He had an ARM, but expected to refi in plenty of time. That was in 2006 in Phoenix. In 2007, he found out the market was in the dumper, he owed 20% more than the house could be sold for, and wasn't going to get refinananced. His payment went from $1500 to $4200. He moved into my front unit and left the keys to his house with the bank. Timing on his part, and he just got caught in the grinder. Plenty of people did that too. He doesn't expect a handout from the government. he just hopes to be ok in 5-7 years.
Cruel to say they oughta pay the price? Somehow Darwin is celebrated but his theory is selectively applauded.
Now, if you look carefully, you will find that the FBI has 19 mortgage fraud investigations open, 3 in the las
Re:There's a difference between 'dumb' and 'trusti (Score:2, Insightful)
You are making the posters point:
"A mortgage is a huge commitment. You're going to be paying it back for a long, long time" means it is scary, because you can't foresee the long, long future you are making a commitment to.
Also, this argument was countered by clever sales people, saying, well you are taking a 30 year mortgage, but you are staying only (on average) for 5-7 years in the house. So what do you care about the interest rate for longer than that time period (balloon loan?). So average people got lured by false argumentation to they overcame their fear.