November 27, 2020

Jobs Data Cements a Bad Week for the S.&P. 500

Weak data on jobs tripped up Wall Street on Friday, capping the worst week of the year for the Standard Poor’s 500-stock index and throwing cold water on optimism that the country was finally poised for a sustained recovery.

The employment figures for March showed that employers added the fewest jobs in nine months and that more people gave up looking for work. Employers added just 88,000 jobs, according to the Labor Department’s monthly survey. That is half the pace of the previous six months. The report was far worse than economists had forecast and a disappointment for investors following positive signs on housing and the job market over the winter.

The Dow Jones industrial average fell 40.86 points, to 14,565.25, down 0.3 percent. The index was down as much as 171 points in the early going, but it rose gradually throughout the day. The Standard Poor’s 500 fell 6.70 points, or 0.4 percent, to 1,553.28. The S. P. was down 1 percent for the week. The Nasdaq composite index, which includes many technology companies, fell 21.12 points, or 0.7 percent, to 3,203.86.

The employment survey, one of the most closely watched economic indicators, dented investors’ confidence in the country’s economic rebound. The stock market has surged this year, and the Dow hit another high close on Tuesday. The index is still up 11.2 percent this year.

“Things are still looking decent, but there’s no doubt that this was a bit of a disappointment,” said Brad Sorensen, the director of market and sector research at Charles Schwab. “We’re watching to see: is this the start of another soft patch?”

The Treasury’s benchmark 10-year note rose 15/32, to 102 4/32, and the yield plunged to 1.71 percent, from 1.77 percent late Thursday. The yield declined to 1.69 percent at one point on Friday, the lowest since December. The benchmark rate has declined sharply over the last month, from 2.06 percent on March 11, because demand for low-risk assets increased as evidence mounted that domestic growth was slowing.

Technology stocks fell the most of the 10 industry groups in the S. P. 500, dropping 1 percent. Among big decliners in tech stocks, Cisco Systems shares fell 43 cents, or 2 percent, to $20.61. Oracle stock dropped 34 cents, or 1 percent, to $32.03.

Investors were cutting their exposure to risk, in addition to buying Treasuries, by playing it safe with companies that provide rich dividends and stable earnings. Utilities and telecommunications industries, for example, bucked the downward trend in the market, with both rising 0.4 percent on Friday.

The Dow Jones transportation average, which includes airlines like United and Delta and shipping companies like U.P.S. and FedEx, was down 3.5 percent for the week, its biggest weekly decline since September. The index is thought to be a leading indicator of the broader market.

Investors will shift their focus to earnings reports next week.

Alcoa, the first company in the Dow index to report earnings, will release its first-quarter financial results after the markets close on Monday.

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Off the Charts: Information Technology Dividends Surge Past Consumer Staples Sector

S.P. Dow Jones indexes reported that in 2012 the technology sector accounted for 14.7 percent of all dividends paid to investors in the 500 companies, up from 10.3 percent in 2011 and from a little over 5 percent back in 2004. It replaced the consumer staples sector, which had been the largest payer of dividends for the previous three years.

The change was largely because of the decision by Apple, now the most valuable company in the world, to begin paying dividends last year. The company had been public for more than three decades before it announced plans in March to begin making payouts. Four other technology companies in the index — all but one of which had been public for more than two decades without paying a dividend — later joined in making payments to shareholders.

With those changes, 60 percent — 42 — of the 70 technology stocks in the index are now dividend payers. The dividends from many technology companies are relatively small, however, and of the other sectors, only health care comes close to having as large a share of companies that do not pay dividends.

But a few years ago, the idea that most technology companies would choose to pay dividends rather than hold profits to be reinvested, would have seemed highly unlikely. In 1999, when the technology stock bubble was nearing an end, companies that paid dividends were generally viewed as boring and growth companies as exciting. Over all, the S. P. 500 index rose 20 percent that year, but the stocks that paid dividends were up only 4 percent. A portfolio composed only of big companies that did not pay dividends would have risen 90 percent.

The stocks in the S. P. 500 are generally the largest and most widely held stocks in the country. S. P. estimates that this year they will pay nearly three-quarters of all dividends paid by American companies. The accompanying chart shows information on the three sectors that have been the largest payers in at least one of the last nine years — and provides a cautionary warning about the risks of buying stocks solely because they pay high dividends.

The financial sector was the largest dividend payer by far in the years leading up to the financial crisis, and those dividends were more than supported by reported profits. But those profits vanished at many of the companies, and so did the dividends. The sector went from providing nearly 30 percent of all S. P. 500 dividends in 2006 and 2007 to providing about 9 percent of them in 2009 and 2010. That figure is now back to more than 12 percent, and will continue to rise if the Federal Reserve allows big banks to increase their dividends, as many want to do.

Floyd Norris comments on finance and the economy at

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Smartphones Can Now Run Consumers’ Lives

LAS VEGAS — The smartphone is no longer just a portable computer in your pocket. It has become the remote control for your life.

Want to flip off the living room lights, unlock your front door or get a reading of your blood pressure? All of this can be done through mobile apps that work with accessories embedded with sensors or an Internet connection.

For several years, technology companies have promised the dream of the connected home, the connected body and the connected car. Those connections have proved illusory. But in the last year app-powered accessories have provided the mechanism to actually make the connections. That is partly because smartphones have become the device people never put down. But it is also because wireless sensors have become smaller, cheaper and ubiquitous.

Big companies with strong brands have been heavily promoting the new uses for these gadgets. General Motors advertises its Chevy Malibu Eco with a man showing his parents how he starts the car with a smartphone. A major selling point of the popular Nest thermostat is its ability to turn up the furnace from miles away with a cellphone.

“Now that, increasingly, consumers have a device with them to monitor virtually anything they do with the Internet, why not offer that capability to monitor and remote control?” said Ross Rubin, an analyst at Reticle Research.

The idea of turning off the lights with a smartphone may seem gimmicky, but consumers are warming to applications, said Bill Scheffler, director of business development for the Z-Wave Alliance, a consortium of companies that make connected appliances. The situation resembles the time when power windows started catching on for automobiles, or when television makers started offering remote controls, Mr. Scheffler said.

“It used to be that people would say, ‘Why does anybody want a remote control for a TV if you can get up and change the channel?’ ” he said. “It’s just progress.” Companies like ATT, Black Decker and Honeywell have started selling app-linked products, he said.

At the International Consumer Electronics Show, which has attracted more than 150,000 people here this week, dozens of companies are showing off connected accessories they can hook up to their home appliances to make them work with smartphones, and many are also displaying wearable devices that can help people monitor their health on their phones. Some of these products are being provided by large companies. ATT, the wireless carrier, said that in March it would begin selling a wireless security system called Digital Life that will allow people to use tablets or phones to monitor cameras, alarms and even coffee pots.

If a burglar trips a motion sensor in the house, for example, a user can receive a text message, then call the police. Customers can choose to expand ATT’s wireless service to appliances like lights, door locks, thermostats and security cameras, which can be controlled and monitored through the ATT mobile app.

Ralph de la Vega, chief executive of ATT Mobility, said in an interview that home security was a big opportunity to increase revenue. Only 20 percent of homes have security systems, he said, leaving millions of homeowners as potential buyers.

“I think it dramatically changes how people feel about their home and how secure they feel about being outside the home,” Mr. de la Vega said. “I think it’s an easy sell.” The company has not announced prices for the service.

Ingersoll Rand, which makes industrial products, offers a $300 starter kit and software for people to connect their homes. It includes a lock, a light and a wireless “bridge,” or base station, to connect the devices to the Internet. They can be controlled with a smartphone or tablet app called Nexia Home Intelligence. Customers also must pay at least $9 a month for a subscription; they can choose to buy the appliances and the bridge separately.

Products by several other companies take advantage of a smartphone’s sensors and connection to the Internet to monitor consumers’ health. IHealth sells monitors for people to track their blood pressure with an app. At the electronics show, it introduced a wireless glucose meter, called the Smart Glucometer, that lets people with diabetes determine their blood sugar. A user puts a blood sample on a test strip, pops it into an accessory attached to a smartphone, and an app gives a reading of the blood sugar level.

Adam Lin, general manager of iHealth, declined to say how many products the company had sold, but he said it was in the “six-figure” area. IHealth products have appeared at Apple, Target and Best Buy.

In addition to people who are interested in their health, health insurance providers might embrace monitoring products. Mr. Lin said iHealth was discussing with two insurers whether to provide its products to patients, which would help reduce their doctor visits.

A small start-up, AliveCor, has created an iPhone case that, when grasped, records an accurate electrocardiogram on the iPhone screen via its app. The company has attracted financing from Khosla Ventures, a prominent Silicon Valley venture capital firm.

Nike, Jawbone and Fitbit sell wearable electronic devices for people to track their movements with smartphones. Fitbit, based in San Francisco, sells a pocket pedometer called the Fitbit One, which can track a user’s steps and floors climbed, and also monitors sleep patterns. Its newest product is due in spring, the Fitbit Flex, a step counter and sleep tracker that is worn around the wrist. It synchronizes with a smartphone app to give users updates.

Woody Scal, chief revenue officer of Fitbit, said the company sold its devices in 10,000 retail stores in the United States. Its Fitbit One is the best-selling sports device on He said one reason that wearable fitness gadgets had become popular was that the sensors had shrunk and battery life had improved. That helps make the products slimmer, more stylish and easier to use.

Mr. Scal said wireless fitness devices were becoming popular because they addressed basic needs for consumers, unlike another trend seen at the show, enormous televisions.

“In the end, I don’t wake up in the morning, look myself in the mirror and ask whether my TV has enough pixels,” he said. “But I do wonder how I’m going to get enough exercise, eat better, sleep well or manage my weight despite all the other things going on in my life.”

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DealBook: Facebook May Be Forced to Go Public Amid Market Gloom

Harry Campbell

Facebook is in a corner.

Another Internet hot shot, Groupon, is trading below its offering price, and the market for Internet initial public offerings over all appears to be deflating. The European sovereign debt crisis isn’t helping the market gloom. The coming months are shaping up to be a bad time to undertake an I.P.O.

Still, Facebook will almost certainly have to go public during this time whether it wants to or not — and whether or not it can get a valuation of $100 billion or more in doing so.

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And it’s partly Facebook’s fault — it just has too many shareholders.

Securities regulation requires a United States company with 500 or more shareholders of record to begin filing reports, including audited financial information, with the Securities and Exchange Commission four months after the year it exceeds this threshold.

Facebook most likely exceeded 500 shareholders this year. By the end of April 2012, it will become subject to this heightened regulation and have to disclose a spate of confidential business information.

Most start-up technology companies are able to avoid passing this threshold. They finance operations from a handful of investors. The largest ownership group is typically employees who receive options, a group that is exempt from this calculation. In 2008, Facebook switched from awarding options to restricted stock, but the S.E.C. went so far as to give the company a special exemption to permit this.

Facebook appears to have been pushed over the edge by two extraordinary events.

Long-time employees have been exercising their options and selling the shares in large quantities on private markets. Facebook reportedly issued these employees options without any restrictions on resale, except that it has a right to repurchase the shares if employees try to sell. But the company has not always exercised this right, instead allowing these shares to be transferred to new investors, which count toward the 500-person threshold.

And in January, Facebook arranged to sell $1.5 billion in shares through Goldman Sachs to new investors. This offering appears to have pushed it over the line.

Still, Facebook is required only to begin reporting and filing information with the S.E.C. at the end of April. The company is not legally required to go public and list shares at this time, though the S.E.C.’s requirement alone will be a big impetus.

I.P.O.’s are built not only on company fundamentals but on salesmanship. Typically, companies try to go to market off the release of their public information and financial statements to the S.E.C. Drawing back the curtain with an offering allows a company to sell its shares with maximum hype. Companies also conclude that if they are going to be subject to much of the regulation that comes with being public, they might as well just go ahead with an I.P.O. and get the full benefits of being public.

There is precedent for this from a Facebook competitor. In 2004, Google was also forced to begin filing its financial information with the S.E.C, and timed its I.P.O. to coincide with this event.

Facebook will most likely want to do the same.

Even if Facebook could resist, an eager army of Facebook employees is pushing hard for an I.P.O., according to Eric Eldon of TechCrunch. In 2008, Facebook adopted a new restricted stock program that prevented employees from selling their shares until an I.P.O. or a sale, or if Facebook permitted it. Even employees who acquired shares before this time are forbidden from selling shares under the company’s insider trading policy unless Facebook opens a trading window. But this window has remained closed; the last time Facebook allowed employees to sell shares was in 2009.

Facebook is thus facing a choice it may not want to make. It can hold off an offering, risk employee wrath and begin complying with S.E.C. regulations. Alternatively, it can push forward with an offering in a choppy market that may not produce the best result.

It could have prevented this turn of events.

Facebook could have exercised its repurchase right and bought the shares that have flooded the private markets. While it may not have wanted to spend the money to purchase these shares, Facebook could have funneled these shares into friendly hands, like Goldman Sachs. LinkedIn, for example, worked with SharesPost, the private trading market, to ensure that before its offering, its shares were bought on the exchange only by existing investors. Zynga has taken even a stronger stance, refusing to register share trades in some instances.

Facebook also shoved itself over the cliff when it offered shares to Goldman to be sold to third-party investors. A widespread offering of this type was bound to create a stir and regulatory attention. It also probably sent Facebook over the 500-shareholder level.

There are lessons here for entrepreneurs.

From the get-go, companies may want to have stock option plans that prevent sales to third-party investors until an I.P.O. or other liquidation event. This will have the benefit of keeping the company below the 500-shareholder level and will also allow it to control any private market in its shares from springing up. Twitter, LivingSocial and Square have all reportedly required new investors to agree to terms like this.

If there is a villain here, it is not the securities regulations. This month, Senators Pat Toomey, Republican of Pennsylvania, and Tom Carper, Democrat of Delaware, introduced a bill to raise the 500-holder limit to the equally arbitrary number of 2,000. This bill should be called the Facebook bill. But Facebook is an outlier. In the future, Internet companies should be able to manage their shareholder base to avoid surpassing this threshold.

Raising it to 2,000 or another number may be appropriate given that smaller companies have fewer opportunities these days for public offerings and may need to sell to a larger number of people. But it shouldn’t be done because of Facebook, which had all the opportunities in the world to sell shares to a select number of private investors.

Facebook has strong incentives to go public next year. But it may end up with an offering at a less-than-opportune time or a valuation of less than $100 billion. Facebook’s own choices have left it without full room to maneuver.

Steven M. Davidoff, writing as The Deal Professor, is a commentator for DealBook on the world of mergers and acquisitions.

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DealBook: Groupon Prices I.P.O. at $20 a Share

As Groupon headed out on the road show for its public offering, executives faced a tough sell. Fielding questions about the company’s management, accounting and model, Andrew Mason, the founder and chief executive, and others had to convince investors that the daily deals site was not this generation’s equivalent of, the online retailer that imploded after the last dot-com boom.

In mid-October at the St. Regis in New York, the usually irreverent Mr. Mason spoke somberly in business school parlance about gross profits, return on investment and other measures of the company’s prospects. Exchanging his usual uniform of jeans and T-shirts for a pressed suit and neat haircut, the chief executive told a packed room of 300 investors that “with a market measured not in billions but trillions of dollars, we’re just getting started.”

His pitch worked.

On Thursday morning, whispers of zealous demand snaked through Wall Street. As investors clamored for shares, Groupon, at the end of the day, priced its initial public offering at $20, above the expected range of $16 to $18. The stock sale values the company at $12.65 billion.

The demand, in part, is driven by a lack of supply. The current owners are holding on to their stakes, and Groupon is initially selling just 35 million shares, roughly 5 percent of its total, according to two people with knowledge of the offering.

While it’s an exceptionally small pot, it’s not a novel template. Groupon is following the lead of several Internet companies this year, which have favored small offerings to help buttress their stock prices.

LinkedIn, which went public in May, initially sold less than 10 percent of its total stock, announcing plans on Thursday to sell additional shares. By comparison, technology companies in the United States have typically offered about a third of pool, according to Thomson Reuters.

Christopher Brainard, the head of Brainard Equities, was waiting to hear from bankers whether the family office got a piece of the I.P.O., which he is looking to buy for the long term. “The negative press has been overdone,” he said “We think there’s a lot of demand.”

The next test for Groupon comes on Friday, when the company is set to start trading on the Nasdaq market. If shares of the technology company experience a significant pop on the first day, it could set the stage for another strong wave of Internet-related I.P.O.’s like Zynga and Facebook, both of which are expected to go public in the next 12 months. Should they fizzle, it could dampen enthusiasm for the broad sector.

David Menlow, the president of the research firm, said that the small size of the offering and high interest in the company was likely to provide a big bump in Groupon’s stock price on Friday.

“I think we’re going to see prices on this that, on a percentage basis, will be more than the market has seen in many years,” he said, adding that “the Internet bubble is being slightly reinflated.”

Michael J. de la Merced contributed reporting

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Motorola’s Identity Crisis

But the company has never grappled with something like this: a murky future governed by Google, a powerful master with unclear intentions.

In announcing its planned $12.5 billion purchase of Motorola Mobility last week, Google emphasized its interest in the company’s rich trove of 17,000 patents. That portfolio would allow Google to defend itself against foes like Apple and Microsoft in the legal arena, where billions of dollars in patent licensing fees can be indirectly negotiated through lawsuits and countersuits.

But while industry analysts and insiders say the rationale makes sense, they also say it leaves Motorola in an unusual position. Many acquisitions are aimed at creating some well-articulated synergy between the two companies, but Motorola’s future role in this union — beyond patent warehouse — is unclear.

Heightening the uncertainty is that the companies involved, both of which declined to comment, are in some ways as different as two technology companies can be. Google makes Internet services and software, thrives on high profit margins and distributes its product using giant data centers. Motorola makes hardware, has modest margins on a good day and moves its products on trucks and airplanes and through brick-and-mortar stores.

Some hope the cultures will fuse and lead Motorola to a future as storied as its past. Martin Cooper, 82, who worked at Motorola for 30 years and developed the first hand-held cellphones there, said he hoped great things would come from combining Google’s momentum and confidence with Motorola’s tradition of excellence in radio technology.

“The combination might make Motorola successful — again,” said Mr. Cooper, whose patent from the early 1970s for cellular phone technology is among those that hang at the company’s entrance.

At the least, industry analysts said Motorola almost certainly would become a laboratory for Google to seek to perfect Android, its mobile phone software, in concert with newly acquired hardware engineers. Others say Google may wind up giving financial backing to Motorola to help it revive its flagging fortunes in Europe and Asia.

But if it appears to be getting too cozy with Motorola, Google risks upsetting other mobile phone makers like HTC and Samsung, who build some of the most popular smartphones and tablets running on Android.

“How do you compete with your partners and also work with them?” said Ben Schachter, an analyst with Macquarie Capital, who called the situation a “head-scratcher.”

Google has said it will allow Motorola to run independently. But some analysts and investors think Google could markedly pare back or sell big parts of Motorola that create conflicts with partners or are not central to its goals. And that makes for uncertain times for the 19,000 employees at Motorola Mobility in Libertyville, a northern suburb of Chicago, and around the world.

“It’s like, thanks for everything you did in the 20th century, but you’re being bought by a search engine,” said Roger Entner, a telecommunications industry analyst and founder of Recon Analytics, a market research firm. He added, “Nobody ever buys a company and leaves it alone.”

Motorola traces its beginnings to 1928, when two brothers, Paul and Joseph Galvin, started a company making power converters for household radios. In 1947 it changed its name to Motorola, after its popular car radio brand. The company produced radio phones that helped American troops communicate in World War II, car phones in the 1980s, and the trend-setting MicroTac and Razr cellphones, among other products.

But in recent years, after the Razr’s popularity faded, Motorola flirted with financial doom. It was only in the last few quarters that it surged back under the leadership of Sanjay Jha, a former executive at Qualcomm, who joined Motorola in 2008 when it was in danger of missing the rise of the smartphone.

He made significant changes, cutting thousands of employees and splitting the business in two: Motorola Solutions, which sells equipment to businesses, and Motorola Mobility, which handles consumer products like phones and set-top boxes.

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DealBook: Tax Policy Change Would Bring Cash Piles Abroad Back Home

Harry Campbell

Apple has a cash problem. It’s not just that Apple has too much cash, $76 billion as of June 30. It’s rather that the bulk of that pile, estimated at $41 billion, is held abroad.

Apple does not want to bring it back to the United States for several reasons, primarily because of the tax consequences, but also because of its own growing foreign presence. Apple is not alone — this problem is an increasing one in corporate America. And the answer may not be more big, all-cash acquisitions, like Google’s $12.5 billion offer for Motorola Mobility.

In an analyst report in May, JPMorgan Chase estimated that 519 American multinational corporations had $1.375 trillion outside the United States. The problem is particularly acute among technology companies, which historically tend to hoard cash because of the cyclical nature of their business.

A recent Moody’s report noted that Microsoft held $42 billion abroad, or more than 80 percent of its cash. Cisco Systems has $38.8 billion, or almost 90 percent of its cash. Google — at least before Monday’s deal — had nearly $40 billion in cash, with more than 43 percent of it held abroad

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Tax policy is driving much of this trend. For multinational corporations, cash earned abroad cannot easily be remitted to the United States. If it is paid back to the United States, it is subject to a dividend tax that can rise to as much as 35 percent. Companies are loath to pay this tax because while they can offset it with taxes paid abroad, the companies still end up paying a relatively high tax rate.

Yet it is not just a tax issue. Many United States companies want to keep cash abroad to focus on high-growth regions for investments and acquisitions.

A recent Standard Poor’s study found that 50 percent of sales by companies in the S.P. 500-stock index are outside the United States. Interestingly, the report also found that these companies paid more in foreign taxes than to the United States government. For Apple, 60 percent of its sales are abroad, and like these other companies, its foreign sales are expected to only go higher.

So, for those who expect that a change in tax policy would prompt Apple and other companies to put their cash piles to use in the United States, don’t be so sure. Even if there were no dividend tax, a large portion of this cash would stay abroad as these companies focus on higher growth overseas for investment.

Still, the current tax policy clearly distorts the practices of United States companies. One of the reasons Microsoft acquired Skype was because it was located in Luxembourg. Microsoft could use its foreign cash to make this acquisition without having to first repatriate it to the United States.

More broadly, many American companies return the cash every quarter to the United States, but then send it back abroad by quarter-end to avoid it being counted as a deemed dividend. The current tax laws thus encourage these companies to engage in cash manipulation and keep too much cash abroad.

In 2004, Congress enacted the American Jobs Creation Act, a tax holiday for companies to repatriate cash. The dividend tax was reduced to 5.25 percent from 35 percent. In exchange for this reduction, Congress required that any cash repatriated be invested in the United States. The cash could not be used for dividends or stock repurchases.

Alas, cash is fungible. A study of this tax holiday, entitled “Watch What I Do, Not What I Say: The Unintended Consequences of the Homeland Investment Act,” found that in the year following the act, repatriations increased by $230 billion from the previous year, to $299 billion.

Five companies alone — Pfizer, Merck, Hewlett-Packard, Johnson Johnson and I.B.M. — repatriated $88 billion, But the repatriation did not result in increased investment. Instead, companies largely repatriated the money and used their current United States holdings to pay out dividends or engage in share repurchases. This was contrary to what Congress had intended.

While the cash was not used for investment, this does not mean it did not have an overall positive effect on the American economy: shareholders went on to spend this cash. The study’s authors acknowledged this, stating that “presumably these shareholders either reinvested these funds or used them for consumption, thereby having indirect effects on firm investment, employment or spending.”

The tax holiday may therefore have stimulated the economy, although a Congressional Research Service report found that the companies that repatriated the most money actually cut jobs from 2004-6.

Still, the act also had a pernicious effect. American companies now accumulate cash and wait to repatriate these holdings, knowing that Congress will probably declare another tax holiday eventually.

Why engage in this game every few years? Congress could permanently modify United States tax policy to set the rate at a lower amount. This would be recognition that Apple and its like are multinational companies and that this problem is not going away. The world is global, and fencing off cash like this for our best companies is unrealistic.

More important, although these companies will still leave some cash abroad, more of it will come back to the United States. If it were invested, that would be terrific but not necessary as it would also end the distortions that drive even more investment abroad.

Google provided a recent example only this week with its Motorola Mobility acquisition. Google has more of its cash in the United States than other comparable technology companies since it is not a retailer like Apple.

Google is also more willing to take on debt in the United States to finance acquisitions, having completed in May a $3 billion debt raise. This was done to provide it more United States cash. Google provides anecdotal evidence that ending this distortion will end the foreign cash bias.

A permanent tax reduction would not only cut taxes but actually raise revenue, allowing for Republicans to vote for it. And it should be a holiday without restrictions — trying to force companies to invest the money rather than pay dividends is a useless exercise that will create only more bureaucracy.

Even if the money were largely spent on buybacks and dividends and a large portion were kept abroad, it would still be reasonable to expect $300 billion to $600 billion to be repatriated. This money would flow into the economy, making the dividend tax cut a stimulus package that Democrats could support.

A 2008 simulated analysis by Decision Economics found that such a reduction would raise about $50 billion a year for the federal government from the tax received and the increased growth, over a five-year period. Economic growth would be increased by up to $62 billion a year.

The Obama administration has previously been negative on such a tax reduction, but it might want to reconsider. This is the rare tax policy move that both Democrats and Republicans should be able to easily support. It is one that would allow Apple and other big American multinationals to spend money more freely, something needed in a troubled economy. It may even push Apple to finally put to use some of its gigantic cash pile.

Steven M. Davidoff, writing as The Deal Professor, is a commentator for DealBook on the world of mergers and acquisitions.

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Dell Posts Flat Sales but Its Profit Rises 63%

SAN FRANCISCO — Dell’s sales flattened in its latest quarter as government spending declined and the company pared low-margin sales, but its net income rose 63 percent.

The mixed results on Tuesday combined with a lowered revenue forecast for the rest of the year to send Dell’s shares down 7.9 percent in after-hours trading to $14.55. Dell said that net income in the quarter ending July 29, the second of its fiscal year, rose to $890 million, or 48 cents a share, from $545 million, or 28 cents, a year ago..

The company said revenue grew 1 percent to $15.66 billion from $15.53 billion.

The adjusted income of 54 cents per share exceeded analysts’ expectations, while revenue was slightly below expectations. Analysts had predicted 49 cents a share on that basis and revenue of $15.76 billion, according to a survey by Thomson Reuters.

Brian T. Gladden, chief financial officer for Dell, attributed the flat revenue to a strategy of eliminating low-margin products in the consumer sector and paring its business of selling software from other companies.

But Mr. Gladden acknowledged that demand for Dell’s products weakened because of the economy. “It’s clear that the demand environment is weaker and a bit more uncertain than what we had in our previous view,” he said.

The company, based in Round Rock, Tex., showed mixed results in the face of a weakening economy that is causing companies to think hard about buying new technology. Large corporations increased their spending with Dell just 1 percent to $4.6 billion, raising concern that they will reduce technology equipment purchases during any further downturn.

Government sales weakened because of tight budgets, in keeping with a pattern at other technology companies like Cisco Systems. Sales to public agencies, schools and hospitals fell 3 percent to $4.5 billion during the quarter.

Brian Marshall, an analyst with Gleacher Company, pointed out that the economy did not seem to have affected Apple, which had routinely reported record earnings despite the slowdown. But he called Dell’s focus on higher-margin products a sound, but slow, strategy. “They are not going to turn that tanker ship around in a short amount of time,” he said.

Dell, the second largest maker of personal computers behind Hewlett-Packard, is trying to expand beyond its roots in laptop and desktop computers to higher margin products like servers and data storage for corporations. The effort is showing modest results in servers and networking equipment, which grew by 9 percent, to $2.1 billion, while services grew 6 percent to $2 billion.

Dell’s consumer business remained sluggish with a 1 percent increase in sales to $2.9 billion. Shoppers were reluctant to buy new laptops and desktop computers, partly because of the economy, but also because they preferred smartphones and Apple iPads.

Consumers account for around 20 percent of Dell’s overall revenue. Dell sells mobile phones and the Streak tablet to consumers, but they have failed to get much traction.

The company raised its expectations for operating income for the year to a gain of 17 percent to 23 percent, from 12 percent to 18 percent. However, it lowered its forecast for revenue growth to 1 percent to 5 percent, from 5 percent to 9 percent.

Dell said it expected third-quarter revenue to be flat compared with the second quarter, far short of the $16.2 billion that analysts had expected. Dell’s shares had gained 1.9 percent in regular trading to close at $15.80.

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DealBook: Blogging the TechCrunch Disrupt Conference: Ron Conway

Ron Conway, one of Silicon Valley’s most prolific investors, has invested in hundreds of technology companies over the past 15 years, including Twitter and Google. Today, he is speaking at the TechCrunch Disrupt conference on what makes great entrepreneurs stand out. DealBook’s Evelyn Rusli is at the conference and what follows is her live blog of the event.

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