Just as we got word that the number of new home sales dropped to a record low in May, there is also a story out there about a gluttonous 13-bedroom, 23-bathroom, 90,000 -sq. ft mansion for sale for a cool $75 million. And the place isn’t even finished.

Nicknamed Versailles (for the French palace), the home, which is situated down the street from Tiger Wood’s house in Florida, is the largest for sale in the US (it ties for the priciest). But construction on the mega mansion came to a screeching halt last year, when owner  (and billionaire) David Siegel ran out of money for the project. You see, Siegel, who is the CEO of Central Florida Investments and Westgate Resorts, made his money in Florida’s timeshare business. It doesn’t take a financial whiz to figure out real estate + Florida during the recession = bad. The Wall Street Journal reported that instead of using money to finish the house, Siegel is pumping bucks into his company in order to “save the employees.”

Meanwhile, sales for new single-family homes across the US in May were down nearly 33% from April. The poor showing likely is due in part to the expiration of a government tax credit for new buyers. The drop in home sales is the largest since 1963.

Siegel’s mansion is an exaggerated example of the over-the-top excess that helped bust the housing bubble. During the housing boom everyone wanted homes to be bigger, better, and more expensive. Now everyone is lucky if they can afford a modest home, or better yet, sell one.

So, good luck, Mr. Siegel. I’m sure someone will buy your gilded mansion. It just likely won’t be cash-strapped Americans. I hear the mansion is getting interest from buyers from the Middle East and Russia. 

~

Photo by Ian Muttoo. Used under a Creative Commons License.

Silicon Valley went 2-for-3 in yesterday’s primary elections in California.

No doubt you have heard by now of the primary victories by Meg Whitman, who scored the Republican nomination for the governor’s race, and by Carly Fiorina, who will challenge Democratic Senator Barbara Boxer in the general election.

Further down the ballot, and in the Democratic primary, Chris Kelly didn’t gain the party’s nomination for attorney general, finishing behind Kamala Harris, the district attorney of San Francisco. Kelly, the former chief privacy officer of Facebook, spent $12 million of his own money to get about 265,000 votes, less than half of Harris’s total, in a field of seven contenders.

Meg Whitman, the retired president and CEO of eBay, easily outdistanced her main rival, Insurance Commissioner Steve Poizner (another wealthy former high-tech executive), with about 64% of the ballots cast. I was most surprised to learn that there were six other candidates in that primary. Whitman spent $71 million of her own money to get the GOP nomination in what is already the most expensive political campaign year in the history of California. She will face Attorney General Jerry Brown, who served two terms as California’s governor, from 1975 to 1983.

Carly Fiorina, the former CEO of Hewlett-Packard, also cruised to an easy victory, winning more than half of the votes in her primary. Her main rivals, former Congressman Tom Campbell and Assemblyman Chuck DeVore, got 22% and 19% of the vote, respectively. Fiorina, a breast cancer survivor, didn’t have to spend as much as Whitman to get her chance at opposing Senator Boxer, a three-term incumbent. She put some distance between herself and her four competitors in picking up the endorsement of Sarah Palin.

On to November!

~Photo by MegWhitman2010, used under a CC Share-Alike license.

This morning, Apple CEO Steve Jobs will take the stage of the Moscone West convention center facility in San Francisco and will likely hold aloft a new model of the iPhone. The setting is the Apple Worldwide Developers Conference, where the mobile device giant has introduced new iPhone models for the past two years.

The conference runs through the end of this week, and Apple fanboys (as well as fangirls) will obsess on minor revelations each day. Most people, however, will be interested in what the secretive company will reveal in the keynote address today. Rumors are flying that Apple will unveil a new version of its Safari browser during the keynote, in addition to the widely anticipated iPhone 4G. The latest scuttlebutt has it that there will NOT be an introduction of a CDMA-compatible iPhone, so abandon hope for the near term that you’ll be able to buy an iPhone and run it in the US on any carrier network other than AT&T.

I’m not so confident that the new model unveiled today will be called the iPhone 4G. Many observers who claimed to be “in the know” on Apple product plans guessed wrong on the name of the tablet computer Apple unveiled this year, the iPad. I believe “iPhone 4G” could be a marketing misnomer, if that is the real name of the product. While it would, indeed, be the fourth generation of the iPhone (following the original iPhone, iPhone 3G, and iPhone 3GS), this phone would not be capable of 4G data communications on the existing AT&T network in the US. Only a handful of carriers in the US, such as Clearwire and Time Warner Cable, are currently offering 4G capability. TeliaSonera is rolling out 4G service in Oslo and Stockholm. On Friday, Sprint Nextel launched the HTC EVO 4G phone, which uses 3G technology for voice communications and text messaging, with a WiMAX radio for 4G data service.

The iPhone rollout takes place against the backdrop of the unfolding saga of the “lost prototype.” The short version is a prototype handset somehow became separated from an Apple employee at a bar in Redwood City, north of Apple’s headquarters in Cupertino, California. The prototype was sold to Gizmodo, an electronic gadgets site run by Gawker Media. The episode had the smell of a publicity stunt until Apple convinced the district attorney’s office in San Mateo County that a crime may be involved in the case, which led to a raid on the home of Gizmodo editor Jason Chen, where authorities seized a number of items under a search warrant. The legal investigation is still under way, and no one is charged with a crime.

Whatever the outcome of the bizarre Gizmodo case, people will be rushing to buy the new iPhone this summer. And we’ll all have to endure the ensuing noise about how it’s the greatest gadget ever. Ever.

~Photo by Yoshimasa Niwa, used under a CC-Share Alike license.

An evil empire still? Nah. Bill Gates is off saving the world now, ridding underdeveloped nations of malaria and improving education for US children through the Bill & Melinda Gates Foundation. He remains chairman of Microsoft, but gave up the CEO’s post to Steve Ballmer a decade ago.

The company has put many of its antitrust legal troubles behind it, reaching settlements at home and abroad. It’s not a kinder, gentler Microsoft, to be sure, yet it is a less conniving and rapacious company these days.

After winning the “browser wars” of the 1990s, more or less putting Netscape Communications out of business, Microsoft let its Internet Explorer browser slip into obsolescence for much of the past decade. The result? The old Netscape Navigator browser morphed into the Firefox browser, developed by the Mozilla Foundation. Firefox now enjoys about one-quarter of the browser market, while IE is just under 60%.

A lot of people would look at those figures and say, “I’d like to have 60% of my market!” Sure enough, but Microsoft’s share of the browser market fell from about 90% a decade ago to its present condition. The up-and-coming browser is Chrome, from Microsoft’s nemesis, Google, which now holds third place in the market, with a share of around 7%. (Safari from Apple has roughly 5% of the market, while Opera Software has 3%.)

Okay, you may say, that’s an interesting statistic, but Web browsers are free to use. Microsoft is still the world’s largest software company, with fiscal 2009 sales of $58.4 billion. True enough, yet Oracle is coming after many of Microsoft’s markets, and Google is eating into sales of the MS Office suite, along with Excel and PowerPoint, with its Google Apps for Business.

Google is getting so big and so pervasive that it’s attracting the wrong kind of attention from lawmakers and regulators. An online advertising partnership with Yahoo! was called off when members of Congress started objecting, and word is the Federal Trade Commission is about to block the company’s acquisition of AdMob on antitrust grounds. Google is learning, as Microsoft did and Facebook is also learning, that size does matter, at least when it comes to matters of antitrust law.

Google, IBM, Oracle, and other competitors have a long way to go in challenging Microsoft’s software hegemony. Microsoft is no longer invulnerable to competition, however.

 ~Photo by Sebastian Derungs, provided through the courtesy of the World Economic Forum, and used under a Creative Commons license.

More on the last-factory-closing beat: The last US factory exclusively canning sardines abruptly closed this month in Prospect Harbor, Maine. Bumble Bee Foods, which operated the cannery, chiefly blamed the federal limit on herring catches for the shuttering.

With that, another 128 Americans lost their jobs. Not many, of course, in the larger scheme of things — an estimated 8 million jobs in the US have disappeared in the past two years.

Elsewhere in the US, there are still seafood factories that can herring and other fish. The Prospect Harbor cannery, however, was the last one turning out only canned sardines. (“Sardine” is a generic term for canned herrings and similar-sized fish.)

Not being a fan of herrings, canned or fresh, I don’t feel much personal loss about this news, although I’m sorry to see more hard-working people lose their incomes. (The German tradition of eating pickled herring at midnight on New Year’s Eve didn’t take hold in my generation, and my daughter is more interested in shrimp than sardines.) In fact, since the death of my Opa a quarter century ago, I don’t even know anyone who regularly eats sardines, other than Mort Mort Feingold, celebrity accountant for the stars.

Sardines were once the lifeblood of the economy in Monterey, California, as portrayed in John Steinbeck‘s classic novels, Cannery Row and Sweet Thursday. The old joke about the Monterey Peninsula was that its three towns were Carmel-by-the-Sea, Pacific Grove-by-God (for all the churches in PG), and Monterey-by-the-Smell (of the canneries). These days, Monterey’s Cannery Row is just a tourist trap, although it is also the home of the very worthy Monterey Bay Aquarium. The sardines largely disappeared from the bay after WWII, and the canneries closed in quick succession after that. Other than the T-shirt shops on “the Row,” there’s The Sardine Factory, which is a nice restaurant.

So, good luck, you former sardine packers — maybe you could get Radiohead to play a benefit for you.

~Photo by John, used under a Creative Commons license.

The clever comedian Demetri Martin does a routine about how the meaning of any statement can be changed by adding the phrase “sort of.” Such as adding “sort of” to “I love you” or “You’re going to live.”

I had a similar feeling going over the first-quarter financial results for Advanced Micro Devices. The chip firm actually made a quarterly profit for the first time in three years. It reported net income of $257 million on sales of $1.57 billion.

That’s the bare bones of the results. Look a little closer, and you’ll see the company took a one-time, noncash gain of $325 million on last year’s spinoff of GLOBALFOUNDRIES, AMD’s former semiconductor manufacturing operations. The net impact of that gain represented $211 million of that $257 million in net income, meaning the company’s real profit for the quarter was $46 million, which is a very thin profit margin, indeed.

Still, it’s a darn sight better than the profit shown by AMD for 2009, which was $293 million on sales of $5.4 billion. That year-end net income figure was significantly goosed by the company’s $1.25 billion legal settlement with Intel. AMD was able to put $1.24 billion of that payment toward its bottom line.

It’s good to see AMD returning to financial health — sales were up by one-third from a year ago. It will be interesting to see how they do as the year continues.

~Photo by Jason Lam, used under a Creative Commons license.

Suppose you’re in the market for a loan, but balk at the high interest rate you’re offered based on your poor credit rating.

Now suppose you’re an investor looking for a higher return than the low rates offered on investment-grade debt.

Wouldn’t it be neat if you could lend the money to yourself at a rate somewhere in between?

You can if you’re the billionaire hedge fund manager, chairman and largest stockholder of Sears Holdings Corp., Edward S. Lampert!

Sears Holdings’ April proxy filing reveals that in March Lampert and his hedge fund ESL Investments purchased $150 million in commercial paper issued by a subsidiary of Sears Holdings, Sears Roebuck Assurance Corp. The debt carries an interest rate of 1.9%. While that might not seem like a lot, it’s about 10 times higher than the return on most investment-grade commercial paper because of Sears Holdings’ junk investment rating. (The audit committee of Sears Holdings’ board of directors pre-approved this type of transaction last year. Indeed, Sears Holdings’ second-largest shareholder, Fairholme Capital Management, held an equal amount of the company’s commercial paper as of last November.) As a result, Sears Holdings was able to take on short-term debt at a much lower rate than if it had gone to a bank for a loan. As for ESL and Lampert, they’ll earn a higher rate of return than they would purchasing investment-grade paper while helping out the company in which they own a 57% stake.

In his annual Chairman’s Letter to shareholders (read here), Lampert griped about his critics’ lack of respect for Sears Holdings’ financial and strategic accomplishments, including its substantial reduction in debt last year. To hear him tell it, Sears is the Rodney Dangerfield of the retail industry because it gets “no respect” from the credit-rating agencies, while some of its competitors get a pass. While Lampert concedes the need for caution amid the weak economy and retail environment, he says Sears Holdings’ 2009 “performance far exceeded many observers’ expectations and we hope to receive credit for this performance in the form of higher credit ratings.” He goes on to fault the agencies for their “simplistic analyses” and “critical qualitative conclusions,” regarding Sears’ performance and financial health.

Whether the credit-rating agencies come to share Lampert’s rosier view of his company’s strengths and recent accomplishments remains to be seen. Until then, he’s found an alternative that appears to benefit both Sears and its largest shareholder — himself.

~

“Picture by Joe Szilagyi, used under a CC-Share Alike license.”

About this time each year college graduates begin voicing their opinons about who their schools have choosen to bequest wisdom upon them during graduation ceremonies. Everyone from Jerry Springer and James Franco to George W. Bush and Barack Obama have been the subject of recent protests.

This year the students at Syracuse University are not too happy with their school’s choice – CEO of JPMorgan Chase, Jamie Dimon.

Dimon isn’t a ‘Cuse grad (try Tufts and Harvard) but he is the leader of one of the biggest banks in the US — a bank that accepted and paid back a $25 billion bailout package from the government. And in today’s economic environment that’s enough for lots of people to dislike him.

Syracuse students against Dimon’s May 16 appearance on campus have started a Facebook page, “Take Back Commencement,” and an online petition that has collected 889 signatures so far. They are even planning a rally and dance party protest (really?) this Friday.

“We … are against using the 2010 commencement to restore the public image of the banking industry,” the petition says. It goes on to call JPMorgan Chase “anti-environmental” and “anti-humanitarian.”

So as the miffed Syracuse students plan to dance their troubles away, Dimon isn’t phased (he’s faced bigger problems). He still plans on making the speech and says that college students have a right to voice their opinions.

~

Photo by Dave Herholz, used under a Creative Commons Licence.

Little attention was paid last week when the last auto assembly plant in California closed, apparently forever.

A red Toyota Corolla sedan was the last vehicle produced at the New United Motor Manufacturing, Inc. (NUMMI) plant in Fremont, a sprawling San Francisco Bay suburb located between Oakland and Silicon Valley. A week earlier, the last Tacoma pickup truck produced for Toyota Motor rolled off the assembly line at NUMMI.

Those events marked the end of good-paying jobs for some 4,700 people at the massive plant, and for more than 20,000 others who worked at NUMMI suppliers in the area. The UAW employees of NUMMI received severance payments from Toyota and other benefits from their union and the federal government. The remainder got a handshake and a goodbye, if that.

The big headlines were made last year, when the bankrupt General Motors said it would pull out of the NUMMI joint venture with Toyota, leaving the plant’s fate in the hands of the Japanese carmaker. Akio Toyoda, grandson of Toyota Motor’s founder and the president of the company, once was the general manager of NUMMI, yet he made the unsentimental decision last summer to close the facility. That last Corolla came out of the factory on April Fools’ Day.

Toyota, of course, was reeling at the time from the worst downturn in the automotive industry since the Great Depression. Now, it’s struggling to rebuild its public image as a manufacturer of reliable, safe vehicles. On Monday the US Department of Transportation proposed to fine Toyota $16.4 million for failing to notify the federal government of reported problems with its accelerator pedals on a timely basis.

The end of NUMMI was reminiscent of the 2008 shutdown of GM’s SUV plant in Moraine, Ohio, an event documented in the elegiac film The Last Truck: Closing of a GM Plant, which was nominated this year for an Academy Award. Say what you will about SUVs (you won’t hear a good word from me) and GM — what the film shows are the very personal losses when such factories close. Not just incomes and jobs, but also friendships, built over decades and now fraying, and manufacturing expertise, scattered to the wind.

Once the tears dry, the City of Fremont will have to work on what to do with the 380-acre site, which lies in a prime location between two interstate highways. The Oakland Athletics last year gave up on their plan to relocate to a new ballpark in Fremont.

This is the face of creative destruction in the automotive industry. Economists may argue that such moves are necessary in rebuilding the worldwide car business. Those economists, however, still have jobs as the worst recession in decades painfully winds up.

~Photo by KOMUnews, used under a Creative Commons license.

(With apologies to Fake Steve Jobs, who does this kind of material much better than anyone else can.)

News item: E-mails sent to Steve Jobs, the CEO of Apple, at sjobs@apple.com are occasionally answered by Jobs himself in a terse fashion.

From: AppleFanboy1

To: Steve Jobs

Dude, u r so awesome!

From: Steve Jobs

To: AppleFanboy1

Thanks!

To: Steve Jobs

From: Overcaffeinated

Steve, can I have a free iPad?

To: Overcaffeinated

From: Steve Jobs

No! Go buy one on April 3.

From: Overcaffeinated

To: Steve Jobs

Should I start lining up at the Apple Store now?

To: Overcaffeinated

From: Steve Jobs

Might be a bit early — go Wednesday or Thursday.

To: Steve Jobs

From: Stephen Colbert

Steve, can I have a free iPad? Also, you can follow me on Twitter as StephenAtHome, and, of course, you can watch me four nights a week on The Colbert Report. Bye!

To: Stephen Colbert

From: Steve Jobs

Stephen, didn’t we give you one already?

To: Steve Jobs

From: Stephen Colbert

Yes, you did, but there’s no harm in asking for another one, or maybe three.

From: Jeff Dorsch

To: Steve Jobs

Hey, Steve, can I get a quote from you for my blog post? I tried to call you on the telephone.

To: Jeff Dorsch

From: Steve Jobs

No.

~Photograph by Danny Novo, used under a Creative Commons license.