German Manufacturing Dwindles
In a sign that Germany is on the cusp of a recession that would harm the overall recovery of the European Union, its manufacturing sector suffered a severe blow. The flash PMI measurement slipped to 46.3 in December. A number below 50 is a signal of contraction. If Germany is the light of the European economy, it has gone out. That may make it less likely that the nation will want to fund more bailouts around the region. Across the rest of Europe, there was a sign that the recession may have made a bottom, at least temporarily. Research operation Markit reported:
The Markit Eurozone PMI Composite Output Index rose to a nine-month high in December according to the flash estimate, up for the second successive month from 46.5 in November to 47.3. However, while the PMI suggests that the downturn may have reached its strongest back in October, the survey continues to signal a steep overall rate of decline, with business activity levels having now fallen in 15 of the past 16 months.
iPhone 5 in China
Apple Inc. (NASDAQ: AAPL) finally has released the iPhone 5 in China. Most press and many analysts believe that the American company’s market share in the People’s Republic has dropped so much that the new smartphone will not help. That assumption may not be true at all. The iPhone 5 still is considered the benchmark against which all other smartphones are measured. Its sales in the United States and throughout the rest of the world have been phenomenal. Nevertheless, the doubters outnumber the optimists. Reuters reports:
Apple’s latest handset might be a powerhouse globally, fighting Samsung for top rank, but weak distribution and a high price tag are limiting its sales in what’s fast becoming the world’s largest smartphone market.
McNamee Knocks Google
One of Silicon Valley’s most ancient and least successful critics attacked the profit model of the Google Inc.’s (NASDAQ: GOOG) Android OS. Roger McNamee arrived late to the debate. Industry experts and investors have worried over how an operating system that is essential free to customers can make money. If it could, Google might be able to diversify beyond its search revenue base. Actually, Android could cost Google money, if its intellectual property is challenged, particularly by Apple or Microsoft Corp. (NASDAQ: MSFT), each of which is on the patent warpath. Bloomberg writes:
“I watch what they have done with Android, and I’m flabbergasted because their market share in units is so high, but look at the profit share,” McNamee told Bloomberg TV. “Apple’s profit share is like 75 or 80 percent because Android has been managed essentially to make it a profitless prosperity. Right now, if Google is not careful, Android will be Samsung or Samsung will be Android.”
Douglas A. McIntyre