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Data Centers Crucial To Lehman Sale

kdawson posted more than 5 years ago | from the gilt-edged dept.

Data Storage 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."

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301 comments

Asset valuation programmer seeks job (5, Funny)

tjstork (137384) | more than 5 years ago | (#25041957)

Hi! I'm a programmer for Lehman brothers and I'm looking for work. I was the designer of Assett Manager 1.0, a powerful tool that allowed our brokers to get values of our contracts....it's not a bad program, but it had a couple of bugs in it that I would like to have fixed.

Re:Asset valuation programmer seeks job (4, Insightful)

Ethanol-fueled (1125189) | more than 5 years ago | (#25042199)

Idiots buying houses they couldn't afford so they were foreclosed and sold for cheap.

Companies enabling idiots to buy things they can't afford have their own assets siezed and sold for cheap.

Poetic Justice(tm)

All the banks are valueless. (0)

tjstork (137384) | more than 5 years ago | (#25042393)

Here's the real problem. Everything the banks have lent money to people to buy are kinda valueless because they are obsolete. Technology keeps advancing such that there is no such thing as collateral any more and thus all the banks are worthless... to some extent you might argue that in a regime of high commodity prices, tech change is so fast that borrowing money to buy a good essentially reduces the money supply. So, since its the Fed's job to pump up the money supply, we need to think about how it really does that.

Wot No Houses? (3, Interesting)

Dogtanian (588974) | more than 5 years ago | (#25043271)

Here's the real problem. Everything the banks have lent money to people to buy are kinda valueless because they are obsolete. Technology keeps advancing such that there is no such thing as collateral any more and thus all the banks are worthless...

I was under the impression that houses were the main cause of the problem- and with the possible exception of some ludicrously techie piles built by multi-billionaires, they aren't really "tech" items and they certainly don't go obsolete within four or five years.

Even though cars (which I'd guess are probably second in terms of loan-spending) only last a few years, it's generally not because the tech goes obsolete, it's because they wear out and/or fall apart. (I'm sure that my parents first car (built in the late 1970s) would still be going today with some engine adjustments for unleaded petrol, except that its rusting to pieces by 1986 precludes this possibility!)

Granted, I'm sure that people take out more (and less justifiable) loans to spend on tech crap than they should- along with home decorating and expensive holidays- but I doubt it's the driving force behind the current economic mess. In fact, moderately cutting-edge tech is *dirt cheap* compared to what it used to be twenty- and even in some areas ten- years ago. People can fill their new homes with techie crap which will generally still be worth a small fraction of what they paid for the house itself. Yeah, the house will last longer and can be considered an "investment" in the way that electronics technology almost never can. But the value and losses involved when that "investment" goes wrong dwarfs the cost of most peoples' boxes of flashy boys' toys.

Re:All the banks are valueless. (2, Insightful)

religious freak (1005821) | more than 5 years ago | (#25043601)

Um no. Though houses, businesses and commercial real estate are worth less due to market conditions, they are certainly not valueless.

If you think your house isn't worth anything I'd be happy to buy it for twice that price :)

Re:Asset valuation programmer seeks job (1, Interesting)

antifoidulus (807088) | more than 5 years ago | (#25042421)

Yeah, 'cept now the idiots are bitching and moaning in an election year, so the people who really get stuck holding the bill are the people who know how to spend their money responsibly. The idiots who bought houses they couldn't afford are whining and getting help from the government, and you know the overcompensated execs at these companies are sure to get their golden parachute, even if it comes courtesy of uncle sam. Kind of funny, weren't these the same people who were whining about how high taxes were not too long ago?

Re:Asset valuation programmer seeks job (4, Insightful)

David Gerard (12369) | more than 5 years ago | (#25042909)

"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:Asset valuation programmer seeks job (4, Insightful)

spun (1352) | more than 5 years ago | (#25042429)

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.

Re:Asset valuation programmer seeks job (3, Funny)

db32 (862117) | more than 5 years ago | (#25042543)

Hey...where are your empathy circuits?! I can't believe you would call Republicans seriously handicapped...

Re:Asset valuation programmer seeks job (1)

PunkOfLinux (870955) | more than 5 years ago | (#25042569)

Unfortunately, while many people made honest mistakes, this stuff has been happening as long as mortgages have been going on - it's just that, now that more people are affected, and there's legitimate allegations of illegitimate activity by the lenders, it's getting big press. Frankly, if the lenders allowed this to happen to increase the bottom line on the income statement, they should be held liable - THEY make the final decisions as to whether or not to lend the money; if they only lent to increase short-term profits, damn the effect on the borrower, then they did something unethical and, in my opinion, wrong.

The lenders dug their own grave, let 'em sleep there.

Re:Asset valuation programmer seeks job (5, Informative)

encoderer (1060616) | more than 5 years ago | (#25043575)

The trouble is that this has NOT been happening as long as mortgages have been around.

Anyone that knows anything about econ knows at the core Economics is about incentives.

In the last 10-15 years inventives in real estate have been flipped backwards.

Let's just take a few examples:

#1 The rise of a secondary market for mortgages.

There was a time when most mortgages were self-funded. The bank would fund the mortgage out of its own pocket. If they were sold, it was to FNMA.

Banks had a real incentive to do solid deals on homes with proven valuations.

In the late 90s the secondary market exploded. Somebody figured how to sell just portions of a mortgage by combining it with portions of other mortgages into a MBS (Mortgage Backed Security) and these securities were sold as ROCK SOLID CREDIT opportunites. The reason?

#2 The derivatives market and other developments

The derivatives market is valued at an est. 6tn. Bigger than stocks. Bigger than bonds. This and other developments, like the consolidation of the IBank industry led to real issues with the 3 credit rating agencies. There began to be financial incentives to give good, AA and AAA ratings to securities.

So these MBS's were given, yes, A, AA and even AAA ratings. You have to understand that AAA means "rock solid investment." That is, a AAA credit rating is considered to be as good as a t-bill.

#3 Brokers
Since banks sold mortgages to the secondary market, all of a sudden you didn't NEED $200k for 15 years to lend somebody $200k. All you needed is $200k for 180 days. This led to the rise of mortgage brokers. With far less scrutiny than banks, it was easier to fudge numbers to get deals made.

This led to an array of CRAZY financial instruments designed basically just to make a profit for the lender.

Take the infamous NINJA loan: No Income, No Job, No Assets. That is, you're given a mortgage based on nothing but good looks and your credit score. Nothing else is verified.

Or the interest-only loan with a balloon payment.

Or ARMs.

Technology played a part, too. A small role, but still, being able to access a HELC via a debit card makes that TV purchase or riding lawnmower or whatever a lot more tempting.

All of these things casue real issues with inventives.

Who is the appraiser working for? Well, he's hired by the loan officer. Who is the loan officer working for? Well, he's not lending his bosses money anymore, since the mortgage will be sold in 90 days after close anyway. Who is the agent working for?

This has NOT been business as usual. Make no mistake about that.

Re:Asset valuation programmer seeks job (1)

characterZer0 (138196) | more than 5 years ago | (#25042605)

Or the hardworking people who bought houses they could afford and invested their savings in stocks of companies whose directors said were financially solid.

Re:Asset valuation programmer seeks job (0)

Anonymous Coward | more than 5 years ago | (#25042613)

I agree with your account that people who lost their jobs eventually couldn't afford their mortgages, but you're wrong about the "hard working parents with dreams of getting out of the ghetto". If they got "suckered into" ARMs, then they are dumb people. If someone says to you, I'm going to loan you 300k dollars at 4.5% interest but in 5 years that interest rate might go up, it's your responsibility to say, well how much higher can I afford? The problem with America and all the dummies that got suckered, is that they made poor assumptions that 1. the economy would never sour 2. that they'd be earning more money by then and 3. that their property value would never decrease. After all, they aren't making more land. Those people, however hardworking they may have been, were dumb, got suckered, and lost their houses. It's a damn shame for them, I won't say it isn't, but it's also a damn shame for the rest of the taxpaying public who has to deal with this mess now.

There's a difference between 'dumb' and 'trusting' (5, Insightful)

spun (1352) | more than 5 years ago | (#25042737)

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 (5, Insightful)

Abreu (173023) | more than 5 years ago | (#25042831)

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:There's a difference between 'dumb' and 'trusti (5, Insightful)

IamTheRealMike (537420) | more than 5 years ago | (#25043045)

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.

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.

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.

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.

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.

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:There's a difference between 'dumb' and 'trusti (1)

Javi0084 (926402) | more than 5 years ago | (#25043165)

Yes but if you are about to make one of the biggest purchases of your life and take out a multi-thousand dollar loan, I wouldn't expect you to become an expert on the subject but at least educate yourself a little.

Re:There's a difference between 'dumb' and 'trusti (2, Interesting)

DriedClexler (814907) | more than 5 years ago | (#25043553)

I agree with your general point:

they were misled. ... dumb people do not DESERVE to be taken advantage of by smart people.

But I still should point out that:

-Any taken-advantage-of borrower requires an even-more-taken-advantage-of lender. The borrower gets to walk away, at least having a gained some time in a home they shouldn't have moved into, while the lender suffers a huge loss. (Of course what actually happened here was the immediate lender, a broker, pocketed a huge gain and dumped it on other investors.)
-The problems were by and large not with the fine print. They were problems like, "I didn't know that adjustable rate mortgages adjust" and "I can't actually afford the monthly payments".

Btw, I think a large part of the problem could have been avoided with a very light regulation: label as "dangerous" any mortgage other than a fixed rate, 20% down, 30-year, fully-amortizing, non-recourse, no-prepayment penalty. Then, require it to be authorize by a rubber-stamp government agency that approves everything it gets, but after taking three weeks to get back to you. That adds a huge psychological barrier to non-savvy buyers, effectively steering them away from unsafe mortgages, while not making much of a difference to people who know what they're doing.

but (4, Funny)

toby (759) | more than 5 years ago | (#25042707)

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.

...But will probably get elected anyway. :(

I'm also sure... (0)

Anonymous Coward | more than 5 years ago | (#25043275)

...that the Congress while Bill Clinton was President didn't remove virtually all underwriting standards and threaten to sue any institution that wouldn't make loans to people who could not afford to repay the loan. No way that happened. Uh-un. I love Bill Clinton and his democratic Congress up to 1994.

Sources? (1)

spun (1352) | more than 5 years ago | (#25043641)

I've heard this allegation from other sources too, but no one seems to be able to show any sources for it. It could be true, and it wouldn't be the only dumb thing Clinton did (NAFTA, for instance), but unless someone can show me the actual text of the law Clinton supposedly signed, I'm going to have to chalk this one up to more right wing lies.

Re:Asset valuation programmer seeks job (0, Troll)

jlarocco (851450) | more than 5 years ago | (#25043377)

If you want to donate your money to bailing people out, feel free. There's nothing stopping you.

But what gives you the right to take my money and force me to help you? I have better things to spend my money on.

Re:Asset valuation programmer seeks job (1)

spun (1352) | more than 5 years ago | (#25043571)

I think you're reading too much into what I wrote, because I don't really feel like bailing people out either. If it were the poor that I were helping, I might be okay with it. But bailouts protect the rich, not the poor, and they really don't need our money, now do they?

Re:Asset valuation programmer seeks job (1)

cubiclegangsta (1326497) | more than 5 years ago | (#25043649)

There is a unique new program for managing your debt!

http://consumerist.com/consumer/clips/snl-skit-dont-buy-stuff-you-cant-afford-252491.php

Sensless spending. Never understood it.But now I will have to pay for others mistakes. Priceless?

Re:Asset valuation programmer seeks job (1)

MPAB (1074440) | more than 5 years ago | (#25042623)

Governments encouraging companies to enable "idiots" buy things they cannot afford are ... praised for "saving the economy" as they buy the companies with taxpayers' money.
In the near future, the companies will be sold again and close the circle.

Re:Asset valuation programmer seeks job (4, Interesting)

Venik (915777) | more than 5 years ago | (#25042741)

The problem really started with you. And here's how. You elected the government, which adopted legislation, which enabled the lenders to give loans to unreliable borrowers, who would buy hugely overpriced houses they could not afford, that would go down in value because they were never worth their price in the first place, sending real estate business down the drain, closely followed by construction, mortgage, and insurance industries, that form the core of the country's financial system, which is controlled and guaranteed by the government, which borrowed trillions from EU, Japan, China and Russia to fight wars abroad for no particular reason, which dropped the value of the dollar, which caused energy prices to skyrocket, which accelerated our country's economic recession, which made it necessary for the government to spend more of your money to prop up this whole pyramid scheme we call the "free market". And how did all of this start? With too many of us voting for the idiot who couldn't spell "economy", let alone understand it.

Re:Asset valuation programmer seeks job (3, Insightful)

Abreu (173023) | more than 5 years ago | (#25042867)

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 (2, Insightful)

IanHurst (979275) | more than 5 years ago | (#25043155)

Most of us did too, unfortunately. The re-election is truly unforgivable. Anybody can be wrong once, but to vote Bush twice... yeah.

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.

Here's a clue (2, Interesting)

Colin Smith (2679) | more than 5 years ago | (#25043067)

y = (1 + x)^N

It's the function which describes the growth of a debt due to interest.

Here's the function which describes the growth in the money created at exactly the same moment, when the loan is taken out.

y = x

You notice one is exponential, the other isn't in fact growing at all.

That is the Fractional Reserve Banking based monetary system. I'll let you work out the implications.
 

Re:Asset valuation programmer seeks job (1)

gormanw (1321203) | more than 5 years ago | (#25042657)

Let's see what Barclay's has to say about this. What would be cool is if Barclay's would retrofit the data centers with green roofs. They would save about 20% on hvac, making the buy an even better deal. i read about this type of thing in an article called "Data Centers Need Green Roofs" found at http://cleanerairforcities.blogspot.com/2008/07/data-centers-need-green-roofs.html [blogspot.com] Good luck finding good work!

Re:Asset valuation programmer seeks job (3, Funny)

Dogtanian (588974) | more than 5 years ago | (#25042797)

I was the designer of Assett Manager 1.0, a powerful tool that allowed our brokers to get values of our contracts....it's not a bad program, but it had a couple of bugs in it that I would like to have fixed.

Unfortunately it appears that some people missed your important email (subject line:"important Tech news..") about positive and negative values being displayed the wrong way round if the application is started between 7 and 9.30AM. I suspect that many also missed your 284-line MSN message reminding them of the "isolated few dozen places" where they had to watch out for decimal points being a digit or two out of place.

Other than that your software was excellent, and it's a real shame we won't be able to give you your bonus of -$2.347 this year.

Re:Asset valuation programmer seeks job (1)

mwvdlee (775178) | more than 5 years ago | (#25043535)

Was your program responsible for the $1.5 billion "valuation" of Lehman's data centers and HQ as well?

It's all about the data (2, Insightful)

plopez (54068) | more than 5 years ago | (#25042015)

Programs come and go. Information is timeless and valuable.

Re:It's all about the data (5, Interesting)

mccalli (323026) | more than 5 years ago | (#25042087)

No. it's all about avoiding the expense of building one yourself. The actual data in those centers may or may not be worthwhile to the buying organisation, but the floor space and ready-to-roll IT structure most certainly is.

Posted anon since I was involved in one of these things recently.

Re:It's all about the data (4, Insightful)

mccalli (323026) | more than 5 years ago | (#25042145)

Posted anon since I was involved in one of these things recently.

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 (0)

Anonymous Coward | more than 5 years ago | (#25042941)

By the way, information is not "timeless" -- it depends heavily on context. If it didn't, my father, who's been dead for eleven years, wouldn't still be getting junk mail and telemarketing calls.

Re:It's all about the data (4, Insightful)

AKAImBatman (238306) | more than 5 years ago | (#25042153)

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:It's all about the data (1, Informative)

Anonymous Coward | more than 5 years ago | (#25042337)

Multi-gigawatt generators? A very large nuclear power plant only puts out 1 GWe. Lehman's backup generators put out more? Are they fusion powered?

Re:It's all about the data (0)

Anonymous Coward | more than 5 years ago | (#25042465)

When they weren't investing in loans made to people with horrible credit, a project to create MrFusion was being funded and Doc Brown's 2nd prototype powers their data center.

Re:It's all about the data (1)

AKAImBatman (238306) | more than 5 years ago | (#25043057)

A very large nuclear power plant only puts out 1 GWe.

Err... s/gigawatt/megawatt/g. My bad. :-P

(Though multi-gigawatt powerplants are not uncommon. Especially of the nuclear variety.)

Re:It's all about the data (4, Informative)

Will Fisher (731585) | more than 5 years ago | (#25042981)

Almost! It's actually about the location of the data center, i.e, close to the exchange. A fast, low latency connection to the exchange gives you a crucial edge over the competition. It means when things change you can get your trades in before your competition does. This is ever more important in the up-and-coming automated trading systems.

Re:It's all about the data (0)

Anonymous Coward | more than 5 years ago | (#25042149)

Programs come and go. Information is timeless and valuable.

actually I think you mean Sales managers come and go, IT managers are timeless and valuable.

Re:It's all about the data (5, Insightful)

wild_quinine (998562) | more than 5 years ago | (#25042407)

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:It's all about the data (1)

nospam007 (722110) | more than 5 years ago | (#25042603)

>Programs come and go. Information is timeless and valuable.

In London you find the information in the tube every other day.

Data vs Information (1)

snspdaarf (1314399) | more than 5 years ago | (#25042695)

Data is timeless and valuable. Information has a limited shelf life. Lloyd's of London has data that goes back hundreds of years. Let's hope that many years in the future, someone will look at this data and decide not to drive off the same bridge again.

Re:Data vs Information (0)

Anonymous Coward | more than 5 years ago | (#25043363)

You sell greedy people short. No matter what has happened here or how many times in the past, if a financial company finds a loophole to make tons of cash, even at the risk of complete failure and fleecing uneducated investors, I am sure they will take the risk. This is what they do. There may have been a time that people were honorable and helped others, but I am sure this must have stopped once the wheel was invented. /sarcasm

Re:It's all about the data (0)

Anonymous Coward | more than 5 years ago | (#25043273)

Can someone please mod it slashvertisement??? Some desperate IT guy working for a bankrupt Bank post some stupid crap about the data center he works on being the only asset with real value! Come on this is the worst slashvertisement in years!!!
No data center has real value!!! You could just offshore all your data work, this is the Internet age!!! So, bad news for you Americansk: you going to get laid off, you going to sell your pathetic hybrid, and you going to sell all your gadgets. You done, through, finito, kaput!!!! American is finished. We here overseas are receiving so many orders of American companies trying to host their data at our datacenters that my e-mail client is thinking it is spam! The end has came, Americansk. Your country is dead! And we here, at Europe, Asia and Latin America, we are making so much money with your pathetic companies savaging their data to our data centers, that I am going to buy a Ferrari next week (Better to buy just a Mercedes, that was a very important lesson: if you waste money like an Amerikansk, you going to end up on a garbage can, like the Amerikansk ended...)

Asset bigger than realized.... (1, Informative)

Notquitecajun (1073646) | more than 5 years ago | (#25042037)

Banks and financial firms are fairly notorious for being 5-10-15 years behind on modern data retention because it's so expensive to convert over from paper to electronic systems. Having modern systems is a true boon because you're set up to scan, store, and do everything electronically and go paperless. Catching up with past accounts and paperwork is partly ignored by some banks as well - there's lots of paperwork that is lucky to get scanned in, and may sit in boxes in warehouses, particularly in older distressed debt.

Re:Asset bigger than realized.... (2, Informative)

Anonymous Coward | more than 5 years ago | (#25042259)

What?? I'm sorry, I gotta call your bluff here: [Citation Needed].

Banks *love* electronic retention, because it's zillions of times cheaper than paper retention. I was working on a project in the early 90s for a now-purchased-purchased-purchased bank that was nearly zealous in their conversion from warehouses full of checks and bonds and whatever to WORM-drive archiving of photos of said instruments. It didn't get much trendier (and certainly not 5-10-15 years behind) than that. Pretty much any way a bank can remove people or real estate from the equation they will... barring, of course, sexy corner-lot retail space that a competitor might use.

Re:Asset bigger than realized.... (2, Interesting)

Notquitecajun (1073646) | more than 5 years ago | (#25042335)

I deal with a lot of distressed older commercial debt, so I see a lot of the backlog. There are a handful of banks, certainly, that have it right, but there are plenty out there which can't afford the expense of updating to modern data retention, or at least taking care of what is already on paper. There's a ton of paper out there in places like Iron Mountain and such which does nothing but store paper because the bank can't afford to digitize the stuff. You're partly right, at least for the bank you did work with, but I see tons of other material as well that never makes it that far.

Re:Asset bigger than realized.... (0)

Anonymous Coward | more than 5 years ago | (#25042417)

Not to mention boner, it's not a bank.

Wallstreet has arguably the FASTEST available hardware. Every calculation they can make sooner, results in more money made. These guys often roll in new datacenter hardware before the end of a 3 year depreciation cycle.

Suprising? (4, Insightful)

AKAImBatman (238306) | more than 5 years ago | (#25042041)

What assets retain value in the midst of a financial panic? Data centers.

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.

Re:Suprising? (2, Interesting)

russotto (537200) | more than 5 years ago | (#25042257)

You know what else retains value in the midst of a financial panic? Skyscrapers.

Depends on what caused the panic. I wouldn't be surprised if the book value on many skyscrapers dropped significantly about 7 years ago.

Re:Suprising? (3, Insightful)

Kingrames (858416) | more than 5 years ago | (#25042401)

I would say the value of at least 2 of those towers was greatly overestimated, in that ever since then they've cost us way too much.

I am not, however, referring to money.

Re:Suprising? (1)

Deadplant (212273) | more than 5 years ago | (#25043035)

I would guess the opposite.
There was a sudden drop in office space supply in a dense downtown area and a sudden surge in desperate companies needing space asap.

Re:Suprising? (1)

miller60 (554835) | more than 5 years ago | (#25042391)

You're exactly right about the sale/leaseback trend. Several of the well-heeled data center developers are actively marketing the sale/leaseback option, targeting companies who have expansion space left in their data centers. The existing tenant keeps their space, sheds a lot of overhead, retains some expansion rights, and the new owner fills the rest of the space with colo.

Re:Suprising? (2, Interesting)

alexander_686 (957440) | more than 5 years ago | (#25042451)

Tell that to the Japanese, where skyscrapers have fallen in value by a good 50%. When your mortage is worth more than the building this is not an asset.

Re:Suprising? (3, Funny)

Deadplant (212273) | more than 5 years ago | (#25043077)

Come on now, you can't use Japan as an example when talking about real places.
Everyone knows Japan is from an alternate (cooler) dimension and is protruding into our world as a space-time anomaly.

Re:Suprising? (4, Funny)

AndersOSU (873247) | more than 5 years ago | (#25042615)

You know what else retains value in the midst of a financial panic? Skyscrapers.

That's true... Unless there's a real estate crisis coincident with the financial panic.

Sure, a sky scraper isn't going to lose all it's value, but it could be worth less than you paid for it - especially if companies are failing by the dozen and your prospects for new tenants aren't good.

Also from the irony department: Lehman didn't own it's London offices, and the rent Lehman paid for the space was 15% of the landlords total income. The landlord, thinking ahead carried insurance to protect against the eventuality that one of their major tenants would vacate. Their insurance company: AIG.

Re:Suprising? (5, Interesting)

AKAImBatman (238306) | more than 5 years ago | (#25043129)

Sure, a sky scraper isn't going to lose all it's value, but it could be worth less than you paid for it

I somewhat doubt Lehman is making a profit on their data centers, either. What they are doing is liquidating the assets that have value.

The landlord, thinking ahead carried insurance to protect against the eventuality that one of their major tenants would vacate. Their insurance company: AIG.

As amusing as it is, that's exactly why AIG is in trouble. Each tier saw the risk coming and tried to pass the risk upstream. The problem is that the risk was not isolated. With all these upstream pushes, the risk ended up concentrated in the largest companies in the market. It's no coincidence that AIG is one of the largest insurance underwriters in the world.

Re:Suprising? (1)

AndersOSU (873247) | more than 5 years ago | (#25043227)

Agree with you there, I just wouldn't be touting the soundness of investments in real estate (skyscrapers or mortgage backed securities) this year.

The data centers retain their value mostly because they're infrastructure.

Re:Suprising? (0, Troll)

Blimey85 (609949) | more than 5 years ago | (#25043265)

Their insurance company: AIG.

And did you notice that it wasn't until after a cool mil was wired to a bank in the Caymans that AIG was bailed out? Source of that wire? The landlord. What's a mil when you're talking about 17.5% (your 15% is inaccurate) of your total income? Who would have thought The Fed could be bought like that?

DISCLAIMER: I'm bored so I just made all that up. Does sound plausible though, to me at least, but then again I've had but two hours of sleep so what do I know?

Re:Suprising? (1)

Kjella (173770) | more than 5 years ago | (#25042803)

Uhh... is the technology sector doing well? If so, it's only because it's early because when people get poor tech-gadgets are way down on their list of priorities. The last big downturn in the economy computers were still improving at crazy speeds to keep it going, this time around I think few will consider a new computer very high on their purchase list. There's many exciting things happening in terms of development, but 200$ systems aren't exactly going to make killer margins.

Re:Suprising? (5, Interesting)

AKAImBatman (238306) | more than 5 years ago | (#25043181)

Uhh... is the technology sector doing well?

Indeed. It's one of the few sectors where rapidly rising oil costs and plummeting property values has little effect. As a result, the sector is one of the strongest in the market today. And not just because people must have the latest and greatest software and gadgetry. (Consumers actually have less money for that.) Instead, technology is seen as a possible solution to the problems plaguing other industries.

Real world example: UPS developed software to route their trucks through fewer left turns. This rerouting reduces fuel costs and thus produces tremendous savings for the company.

What else is valuable? (2, Funny)

symbolset (646467) | more than 5 years ago | (#25043047)

Intellectual property. Why just last Friday I patented "A business process and related methods to leverage instability in financial markets and raid the US treasury."

I don't expect to deploy the process myself, but licensing should be worth a good bit.

Re:Suprising? (1)

jez9999 (618189) | more than 5 years ago | (#25043241)

You know what else retains value in the midst of a financial panic? Skyscrapers.

You've obviously never heard of 9/11. :-)

Free (2, Funny)

C_Kode (102755) | more than 5 years ago | (#25042083)

Using Linux could have saved millions. ;) :P

Re:Free (1)

betterunixthanunix (980855) | more than 5 years ago | (#25042627)

I agree. I've been using Linux on my laptop for 5 years now, and I must say, I have saved millions of...well, choose your unit, and I've saved millions of it. Dollars, meters, liters, bytes, grams, etc.

Not surprising, but not really about data centers (5, Insightful)

Optic7 (688717) | more than 5 years ago | (#25042103)

Is it any surprise that the most valuable assets in a company that is going down the tubes would be its physical assets, real estate, etc? The summary itself says data centers AND HEADQUARTERS. What a shock that "datacenterknowledge.com" is telling us how valuable and important data centers are. I'm almost tempted to say this is spam, but I can't be bothered to go to the website to learn more about it.

Re:Not surprising, but not really about data cente (3, Insightful)

Anonymous Coward | more than 5 years ago | (#25042247)

Real estate: billions

Data centers: couple million

Re:Not surprising, but not really about data cente (1)

kkffjj (1339025) | more than 5 years ago | (#25042765)

agreed. their real-estate is among the most valuable and pricey properties in ny. They are trying to lump in the datacenters to make it seem like they are worth more (in monetary value). there was probably a waterfountain in the building - but waterfountain.com can't say the waterfountain is among the most valuable assets sold :)

Re:Not surprising, but not really about data cente (1)

Macman408 (1308925) | more than 5 years ago | (#25043107)

I was thinking the exact same thing. I don't know how many people work in their headquarters, but it's quite possible that all the technology (PCs, projectors, printers, etc.) OUTSIDE the datacenter was worth more than the servers, routers, etc. inside (plus the infrastructure, which is also quite valuable).

Of course, in either case, the real estate is probably worth the most. And, real estate won't depreciate as quickly as the data center will - in a few years, the servers and routers will be too slow and not have enough capacity; the cooling capabilities will probably not be enough to match the power density of new servers; and the power distribution network might not be up to the task of feeding all the servers that could fill that data center.

Data is all that matters... (-1, Troll)

mrboyd (1211932) | more than 5 years ago | (#25042209)

All those client personal information and social security numbers will be put to good use. The rest will be scrapped for parts.

"Our biggest asset..." corporate slogans (0)

Anonymous Coward | more than 5 years ago | (#25042403)

Do you remember the popular, almost compulsory, politically correct corporate slogan: "Our biggest asset is our people"?

Re:"Our biggest asset..." corporate slogans (1)

lju (944654) | more than 5 years ago | (#25042467)

It's mostly true. "Our biggest asset is our people['s data.]"

Typical... (0)

Anonymous Coward | more than 5 years ago | (#25042431)

I buy a PC and it's worthless by the time I walk out of the store.

Some PHM buys a metric crap-load (tm) of PC's and they go up in value.

WTF?

I don't think it's so much the hardware. . . (2, Interesting)

JSBiff (87824) | more than 5 years ago | (#25042501)

As the data which is stored on those servers. Don't you think the financial data for tens of thousands of customers is worth something? Also, physical facilities, HVAC, network infrastructure, etc. Also, a lot of the value of a data center, I suppose (I'm no expert in this field) might be less about the hardware itself, as the engineering that went into building up the data center as a cohesive, integrated system.

Free English-Punjabi Dictionary Included ? (0)

Anonymous Coward | more than 5 years ago | (#25042433)

No. Not for the data center.

Move the damn headquarters to New Delhi. Let them bail them out.

Cloud computing not desirable for them? (1)

Bruce Perens (3872) | more than 5 years ago | (#25042507)

Here's an industry that isn't ready to farm out its work to cloud computing. Internally, they operate their own clouds.

This is a Fire Sale, Hard Assets Count Period (3, Interesting)

mpapet (761907) | more than 5 years ago | (#25042753)

First of all, these are unprecedented times in global financial markets. Once in 100 years is putting it mildly.

Second, a data center and a building are the only assets that can be valued with the shotgun marriages the Administration, Treasury, and Fed are making right **now.** By now, I mean no sleep, no one leaves until the deal is closed NOW.

BofA got a sweetheart deal with Countrywide, they are getting another sweetheart deal with whatever brokerage they acquire. The same holds true of JPMorgan Chase and Co.

The Fed has literally run out of money with the AIG nationalization and has asked the treasury to print more dollars NOW. http://www.ft.com/cms/s/0/271257f2-83f1-11dd-bf00-000077b07658.html [ft.com]

Once again, the losses are being socialized while the titans of financial executive management just walk away.

You would be wise to re-balance your asset pool to reflect coming inflation. And any pension holders out there should do your best to liquidate your pension today, that is, if your pension isn't underfunded already or if that is even possible.

Data centers are easy to reuse (1)

captaindomon (870655) | more than 5 years ago | (#25042771)

No big surprise here to me. Data centers are very easy to turn around and use for a different purpose in a new company. Office space and other assets are much more difficult to reuse. In fact, there have been several very large (F500) tenants move around near my office. When they move out, they usually just throw away most of their assets instead of trying to re-use them.

Disgusting (0)

Joe Jay Bee (1151309) | more than 5 years ago | (#25043097)

Here's a disgusting titbit. The day before Lehman went under, Barclays was in talks to buy it. They dropped out, Lehman went under, people lost their jobs, a company was destroyed.

And now who's buying Lehman's assets at a knock down price? Barclays. Picking up the spoils of a catastrophe they were instrumental in causing. What a bunch of dicks. (And that's to say nothing of their absolutely awful banking services...)

Disgusting-working with scale. (1)

Ostracus (1354233) | more than 5 years ago | (#25043315)

How's that attitude any different than say consumers not shopping at their local mom and pop business and then when they goes out of business buying everything?

Re:Disgusting-working with scale. (1)

Joe Jay Bee (1151309) | more than 5 years ago | (#25043411)

It's more like offering to make a huge purchase at a mom and pop store, them banking on it, you pulling out and then buying what you were going to buy at a reduced price. Greedy and selfish, basically.

Anonymous Coward (0)

Anonymous Coward | more than 5 years ago | (#25043191)

It's not the data center they want. The data inside is what is valuable.

Terrible Article & Summary (5, Informative)

Anonymous Coward | more than 5 years ago | (#25043199)

I am an investment banker and can say with confidence that the datacenters were an afterthought in this deal. Important? Certainly. The most important? a joke. Bob Diamond and Barclays have wanted to extend its US investment banking business for several years, and found an opportunity to grab one at a fire sale. But the true value of the deal is enormously larger than listed, as it involves taking on assets estimated (with confidence, I'm sure)at $72 billion and liabilities of $68 billion. I'd recommend reading http://www.ft.com/cms/s/0/5c9dcc26-83f1-11dd-bf00-000077b07658.html?nclick_check=1 [ft.com] to inform yourselves about the transaction.

As to the Bear Stearns datacenters comprising the bulk of the value - that is about as wrong as you can get. The breakup fee (the fee paid to JP Morgan if the deal did not go through) was the building. JPM could have walked from the deal and gotten the builing, so to argue that the deal was for the building/datacenter is absurd. Let's not forget that the Federal Reserve alone lent $29 billion for the transaction. Datacenters are valuable, but not worth that amount of money.

WTF? (1)

melted (227442) | more than 5 years ago | (#25043403)

Why did they even need such a huge datacenter? I guess things can get out of hand when you play with other people's money.

It wasnt the Hardware, but it is now (1, Informative)

Anonymous Coward | more than 5 years ago | (#25043407)

Much of the lehmans data centers in London, are hosted in the East India Docks. I can Tell you that every thing has been switched of. Power, Water, Cooling. Equipment Like that AHU's Chillers, and Underfloor Cooling Units dont like starting up. Looks like i have a fun day tommrow.

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