Time was when dotcoms sold vapourware, and enjoyed enormous valuations based on naive hope. They didn’t make money, they just sold a dream built on foundations of sand. Banks, on the other hand, were the definition of solid. That’s all quite ironic, for these days banks seem to be the ones selling vapourware, and it turned out the foundations of some dotcoms were not so much made of sand as silicon, which from a business point of view is an entirely different matter. The vampire squid/giant investment bank, on the other hand, is not doing so well.

In the last four months of 2010, Apple’s profits came in at $6bn, 78 per cent up on the year before. Google’s profits were $2.54bn, around 28 per cent up on a year ago. Goldman Sachs’ profits were $2.39bn, down 53 per cent on a year ago.

The problem for the bank is that profits have been falling for three quarters in a row. It put the disappointing results down to “low client activity levels”. Three different theories are doing the rounds at the moment to explain the poor results from Goldman. Number one: its clients are worried about uncertainties in currency, bond and commodity markets. Number two: its staff are overpaid – the average pay per employee at the bank is $431,000, although presumably some employees make a good deal more, most a good deal less. The third theory is that the bank is not sufficiently diversified and is suffering from its lack of a retail arm.

An article in Rolling Stone magazine once described the bank as a “giant vampire squid wrapped around the face of humanity relentlessly jamming its blood funnels into anything that smells like money”. Well, maybe its clients have been busy ripping out the bank’s blood funnels.

But here is another piece of irony for you. The ‘dotcom produce vapourware’ row is still raging. Earlier in the week, the man standing in for Steve Jobs at Apple said of Google’s plans in the Android arena that: “They lack performance specs, they lack prices, they lack timing, and so today they’re vapour.”

Google responded by saying that it is activating 300,000 Android products a day. So, as vapourware goes, that seems pretty solid. Google’s co-founder Sergey Brin couldn’t let the comments from Apple’s acting boss go without some kind of response, however. He said that the company is working on other projects but he won’t go into details lest he is accused of peddling vapourware.

Goldman Sachs said of its profits that they were “financially humbling”, but still managed to fork out $15.4bn in compensation and bonuses. Mind you, Google has upped wages for its 24,000 workers by 10 per cent.

Looking forward, the battle between Google and Apple boils down to a battle of philosophy. It’s a contest between Apple’s proprietary software, and Google’s Linux-based open standards.

Meanwhile, the famous bank is left philosophising on why it’s so unpopular, and how it has somehow managed to swap roles with the two giant techs in the production of vapour.


Investment and Business News is a succinct, erudite and informative roundup of today’s top news stories on business and the economy, with analysis thrown in. Sometimes amusing, frequently contrarian, often thought provoking, and always informative, Investment and Business News is free. To subscribe, click on the subscribe function at the top right hand corner of this page. By the way, did we say it’s free?

© Investment & Business News 2013