February 2012

As we move into the meat of the 2012 election season, think of the accelerating convergence of social networking and campaign fundraising as the anti-Super PAC movement.

Super PAC money rolls into campaign coffers in the form of six-zero checks signed by supporters who possess unfathomable means and political interests that they'll spend tens of millions to protect. The social network money, on the other hand, comes from no-name nobodies, kicking in $20 or $50 or maybe $200 at a time, in part because one of their Facebook friends did the same. "That kind of social media fundraising, we tend to view that as the really healthy, great kind, that shows people are engaged and participating and are basically not trying to buy anyone off," says Mary Boyle, a spokeswoman for Common Cause, the Washington, D.C., political watchdog group. It is still the early days for campaign fundraising through social media, but it's clear Silicon Valley can take credit for incubating many of the tools that are launching the revolution. The ubiquity of Facebook and Twitter and the rise of money-gathering platforms like Fundly, of Palo Alto, are clear signs that a change is taking hold in one of the world's oldest professions: political fundraising.

The US Bureau of Prisons is unveiling a program that will allow many of its more than 200,000 inmates to carry MP3 players, packed with personalized music lists, to pass the time.

The music program, currently being tested at a women's unit in West Virginia, is expected to expand to the rest of the system this year, bureau spokeswoman Traci Billingsley says. The devices, ubiquitous in the free world, will be sold in prison commissaries. There is an important catch: Although inmates can choose from a song list of about 1 million titles, the list will be monitored to exclude "explicit" tracks, including material such as obscene or racially charged language.

These days, it’s hard to find a superlative that adequately describes Apple. But maybe simplest is best: biggest. Measured by market capitalization, Apple is the world’s biggest public company. This week it solidified its lead over Exxon Mobil, the previous titleholder, as Apple’s shares hit a record high of $526.29, which gave it a market capitalization of just under $500 billion. Apple becomes only the 11th company to reach the top spot since 1926, according Howard Silverblatt, a senior index analyst for Standard & Poor’s.

Here is the rub: Apple is so big, it’s running up against the law of large numbers. Also known as the golden theorem, with a proof attributed to the 17th-century Swiss mathematician Jacob Bernoulli, the law states that a variable will revert to a mean over a large sample of results. In the case of the largest companies, it suggests that high earnings growth and a rapid rise in share price will slow as those companies grow ever larger. If Apple’s share price grew even 20 percent a year for the next decade, which is far below its current blistering pace, its $500 billion market capitalization would be more than $3 trillion by 2022. That is bigger than the 2011 gross domestic product of France or Brazil. Put another way, to increase its revenue by 20 percent, Apple has to generate additional sales of more than $9 billion in its next fourth quarter. A company with $1 billion in sales has to come up with just another $200 million.

Deutsche Telekom has a problem the size of a Buick parked in its backyard. The failed $39 billion deal to sell its T-Mobile USA business to AT&T cost the latter a breakup fee of about $4 billion. But there was a silver lining for AT&T: The uncertainty of the drawn out regulatory process took its toll on rival T-Mobile.

The fallout for Deutsche Telekom could ultimately overwhelm the breakup fee it collected, with the $3 billion impairment of its U.S. assets potentially just the start. T-Mobile USA -- which makes up about a quarter of Deutsche Telekom's revenue -- is subscale versus market leaders Verizon Wireless and AT&T, and is struggling badly. It lost 1.65 million contract customers last year, leading revenue down 8%. The sale of T-Mobile USA to AT&T, agreed to last March but abandoned in December, was intended to solve the latter's spectrum concerns. It would also have solved T-Mobile's spectrum problem. That could now prove expensive to sort out. And it currently means that T-Mobile's network isn't compatible with some new smartphones. After last year's waiting game, Deutsche Telekom is now trying its own fix for T-Mobile: investing $4 billion to launch a fourth-generation "LTE" network that can support devices like the iPhone for the first time. The spectrum it got as part of the AT&T breakup fee will help on that score. But T-Mobile will still need more mobile spectrum in coming years, so its priority needs to be finding another partner. That is likely to take the form of network-sharing, since regulators objected to market consolidation with AT&T.