## Friday, September 07, 2012

### A Letter to a Guru...

I sent this letter to Vikas Sir who coached me in Physics and Maths (among many other things in life) during my 10th, 11th and 12th grade in response to one of his Facebook posts on Teachers day. I've written it after a lot of thought and with deep feelings and I'm posting it here in the hopes that it might inspire others to let their teachers know how deep an impact they've had on their lives. The letter has been edited for content but it contains most essentials. If any of your teachers has affected your future in such a deep way, let me know in the comments. The text of the letter follows:

Dear Sir,
Please bear with me: This message is extremely long, but I hope that you will spend the time to read it (and maybe come back to it years later and still cherish it).
There are many things for which I'm indebted to you - from Maths and Physics to Computers (remember my Napasoft intern in 2007? That was my first official internship and the "paycheck" handed to me was my "first paycheck").

There are just too many incidents to count and many of them have been erased by the sands of time, but among them, there are certain things that stand out. Many others on the thread have already related tales of events in your classroom, I'll do something different and remind you of things outside of the classroom...
I remember that one day my Mom had come to talk to you about what I should be doing to improve my Maths (she knew it was my Achilles heel) and I don't know if you remember it but you'd told her to enroll me with Natarajan Sir for tuitions - that one piece of advice was crucial to get me to work on my Maths. The patience with which you talked with her and gave her those words of wisdom - I'm extremely grateful to you for doing that. Those few minutes that you spent with her cost you your time, but they yielded benefits for me that make me indebted to you far beyond the cost of time incurred - for without doing that, I wouldn't have worked on my Maths with Natarajan Sir, I probably wouldn't have cleared the 2006 Maths cutoff, there wouldn't have been any JEE rank, no IIT CS, no Google and no California...

Thank you sir for those 2 minutes of sound advice. They helped shape my life in unimaginable ways...

I don't think I ever got the chance to tell you all this, but I am extremely grateful to you for doing all that you have done for me - both during my +2 and afterwards. I cannot thank you enough for it... For, as my Dad says - "A man's livelihood is earned from the teachings of his gurus..." You have been my guru and I hope you will appreciate that whatever I may do in life, wherever I may be, you are responsible in no small way in helping me be there. Please do take the credit due to you for that. This credit is due to you not just from me but from every other student whose heart you have touched in your years of teaching and I'm sure that even though they might not express this in as many words, but they are very grateful to you too...

The wishes that you've received on Teacher's day are but a small measure of the impact you've made on the world. As a teacher, you've invested time and effort in the future generations of this world and the world is and will remain grateful to you for helping train capable engineers that will shape its future and touch the lives of millions in many many different ways over many many lifetimes. On behalf of these millions of silent souls, I send you a sincere thanks. We all are very grateful to you...
Best wishes and do keep what you're doing for as long as you enjoy doing it. Your contributions are deeply appreciated.
On behalf of the extended Prerna family,
With respect and deepest regards,

Yours sincerely,
Divye

## Wednesday, August 01, 2012

### A Dragon-rider arrives...

Good evening Natasha-san,
How are you? I trust that your private dragon-ship brought you here safely? Were there any difficulties? Welcome to Terran... Please come this way...

Thank you for coming. We have been looking forward to your arrival. As you know, 2046 has not been a good year for us. Crime is rife and Commissioner Gordon is having several difficulties in keeping it in check. Ever since the plague of oh-twelve forced the shuttering of the Star-money line of caffeine dispensers, the plebes here on Terran have not been the same. Caffeine deprivation has made them irritable and lethargic... The State is yet to recover from the repercussions. But, I'm getting too far ahead of myself. You will be meeting Dr. Cooper shortly. He will be able to explain the situation far better than I ever can... What would you like to have in the meanwhile? Any lunch? I understand that Broccoli Cheese Souffle is your favorite? I'm sure you know that we prepare it especially well here. The climate is extremely suited for fresh flower-foods.

Ah, here is Mr. Kapoor. Mr. Kapoor - this is Natasha-san. Natasha-san - Mr. Kapoor.

Mr. Kapoor is the head and chief author of this mission and he has spent many minutes awaiting your arrival on Terran. Why don't you two have a chat over lunch? I'm sure you will have many things to talk about.

"Thank you Albert. That will be all."

My pleasure, sir.

Feel free to call for me if you need anything, Natasha-san. As Mr. Kapoor's assistant, it's my duty and honor to ensure that your stay here is comfortable.

Please do have an enjoyable conversation. This room is private and you shall not be disturbed. Good evening.

"Good evening Albert and thank you for bringing Ms. Natasha here."

My pleasure, sir. Goodbye.
* The door closes softly. *

"So Natasha - what would you like for lunch? You must be hungry. The cafe is this way..."

... to be continued.

## Monday, July 30, 2012

### The Price of Achievement

"A lot of unnecessary pain in the world is caused by people running on their own racetracks, furiously trying to get ahead of one another with their heads bowed and their blinkers on. They keep running: trying to go faster, higher and stronger in the hopes of achieving that which has yet to be achieved. In that they sometimes pay a hefty fee - the price of family, of friendship, of kinship and of health. The price of pain is indeed the price of achievement and it must be paid generation after generation but the racetrack does not demand of you the price of love, for you may run on it just as well in a spirit of camaraderie, respect and fellowship. So take some time, raise your head, lift a glance, and acknowledge your fellow runners for it is they that make your race worth running."

~ Divye Kapoor

## Saturday, July 21, 2012

### Coke Studio: Madari English Meaning and Lyrics

Thanks to Sanat Rath, I had the absolute privilege of listening to this superb rendering of Madari by Vishal Dadlani and Sonu Kakkar and an absolutely stunning composition by Clinton Cerejo as part of Coke Studio. Here's the official video. The lyrics of the song are interspersed with the meanings translated to English. Credits for the superb lyrics go to Manoj Yadav. Hope you enjoy it.

Make sure you watch this in HD, it's worth the extra audio quality.

Producers: Coke Studio
Singers: Vishal Dadlani and Sonu Kakkar

(Intro music with chords)
(Slow build up)
(Sharp guitar riff)
(Drums kick in...)

Main Jamura re Jamoora,
Jamura re Jamoora...

Master, master, master*
you're my master
I'm an obedient assistant*,
an obedient assistant...

Main Jamura re Jamoora,
Jamura re Jamoora re...

Master, master, master
You're my master...
I'm an obedient assistant,
an obedient assistant, obedient assistant!

Tera damroo baje, baje damroo,
Man ka mayura,
Man ka mayura,
Jam ke naache...

Your drum beats, the drum beats,
The peacock of my mind, (x2)
dances intensely.

Teri waani ke dam par,
Waani ke dam par!
Jag saara bhaage
Aage paache.

On the strength of your voice/words,
On the strength of your voice/words!
The entire world runs hither tither.

Tu hi dhare muskan ki booti,
Cheetein tu ashuwan ki phoohar.
Tu hi dhare saagar kaa thela,
Tu hi bhare nadiyaan mein dhar.

You are the one who holds the medicine/herbs of smiling (keys to happiness).
You spray a fountain of "ashuwan" (youth?)
You're the one who takes care of the seas.
You're the one who gives flow to the rivers.

(Madari intro repeat with terminating aalap after Jamoora...)

[Sonu Kakkar sings]

(Sonu Kakkar: Aalap)

Haaji lok maakke nu jaande. (x2)
Assa te jaana Takht Hazare.
Te jis wal yaar, Us wal kaaaba...
Te assan phol kataabaan chare...

The people who do the Haj go towards Mecca. (x2)
But I'm going towards the throne/shrine of Hazare~ instead.
In whichever direction is your beloved, that's the direction of the Kaaba# (of prayer).
We have read and scrutinized the books rigorously for this.

(Context: This stanza references the eternal love story of Heer and Ranjha where Ranjha was from Takht Hazare and Heer was from Punjab.)

(Repeat above)

Tatta hove chulha. (2 lines repeat)
Aan fakir tey khakhaar jaawan,
Razi hovay Bullah.

The stove is heating up. (2 lines repeat)
Ascetics may come, have food, be merry, and go.
Bulle Shah (a famous sufi poet & ascetic) - do you find all this agreeable?/are you in agreement?

(Context: In the olden days, wood fired stoves made of brick were used for cooking. They were kindled by blowpipes called 'dukkhads' and housewives would do charity by cooking for ascetics.)
(Repeat above)

Teri rukhi-sookhi, sookhi-rukhi, kha ke dekha,
Har ek niwalah amrit laage.
Tere rehmo karam se, rehmo karam se!
Har phoote kismat uthke bhage...

I tried having your plain, simple, dry food and
every bite now feels like the elixir of immortality. By your graces, your graces,
Every person's bad luck/poor destiny goes away..

Jitna bhar le khilonein mein chaabi,
Utni hai uski raftar.
Tu chalata hai jeevan ka mela,
Tu hi sunein hum sab ki phuhaar.

The amount of winding you give to a toy,
That's the speed at which it runs.
You run the circus of life,
You're the one who listens to our spoutings.

Main Jamura re Jamoora,
Jamura re Jamoora...

Master, master, master
you're my master
I'm an obedient assistant,
an obedient assistant...

Main Jamura re Jamoora,
Jamura re Jamoora re...

Master, master, master
You're my master...
I'm an obedient assistant,
an obedient assistant, obedient assistant!

Mein tera Jamoora...

(Sonu Kakkar: Aalap)

Jamoora mein tera tu mera Madari...

I'm your obedient assistant, you're my master.

(Sonu Kakkar: Aalap)

---
* The master is in reference to the Indian tradition of "Madaris" who make monkeys dance to their commands and they perform shows and street plays. The "Jamoora" is an oblique reference to the monkey who obeys the master's commands ("obedient assistant") though the term is usually applied to a human assistant who follows his master's orders without question.

~ The shrine of Hazare is a place of religious importance for Sikhs.

# The Kaaba at Mecca is the point towards which all Muslims turn to while praying.

This song is a Sufi composition that speaks of a tale at two levels - at the literal level, you can see this as the statement of an assistant whose mind is fired up by the teachings and commands of his master and whose teachings when followed feel like you're being conferred immortality; a deeper interpretation is that this song is a communion with God and the singer is merely a puppet following the wishes of his master, the Lord, and he has tried an accepted the teachings of God and is willing to follow in his footsteps because he controls the keys to happiness and runs the circus of life.

Thanks a lot to @jamshidmehmood on Youtube for helping clarify the Punjabi sections of the song.

## Monday, July 02, 2012

### How do you determine if a number N is a Pentagonal Number?

Just yesterday, I decided to do a couple of problems from Project Euler. I hadn't been to the site in a long long time, but I was happy that I got through Problem 19 and Problem 43 in short order, but then I've temporarily hit a wall with Problem 44. The problem is phrased in terms of Pentagonal numbers and while working through it, I derived an interesting result that I'd like to share with you, namely "How do you efficiently test if a number is Pentagonal?".

Recall that a Pentagonal Number is a number N which is representable by a formula  $\frac{n (3n -1)}{2}$ where n is a Natural number. To test whether N is a Pentagonal Number, all we need to do is to solve the equation: $N = \frac{n (3n -1)}{2}$ which is a simple quadratic and check if n is a Natural Number. That's pretty easy for humans to do when N is a small quantity but programming languages aren't very good with quadratic equations, so we need to do some pre-processing of the quadratic equation for them.

Simplifying the above equation, we get:

$3 n^2 - n - 2N = 0$

The roots of this are:

$n = \frac{1 \pm \sqrt{1 + 24N}}{6}$

Let's analyze the first root:

$n = \frac{1 + \sqrt{1 + 24N}}{6}$

Now, since n is a Natural number, 1 + sqrt(1 + 24N) should be divisible by 6. In more mathematical notation,

$1 + \sqrt{1 + 24N} = 0 \mod{6}$

(Note: Here I'm using the mathematical notation of mod rather than the CS notation of mod. The mod 6 at the end applies to both sides of the equation.)

Simple analysis would then indicate that

$\sqrt{1 + 24N} = 5 \mod{6}$

Just checking the above condition is enough to determine if a number N is a non-generalized Pentagonal Number. But can we do better?

It is well known that the following property holds in modular arithmetic:

$(ab) \mod M = ((a \mod M)(b \mod M)) \mod M$

Applying the above property to square the previous equation results in:

$(\sqrt{1 + 24N})^2 \mod 6 = ((5 \mod 6)(5 \mod 6) \mod 6)$

or,  $(\sqrt{1 + 24N})^2 \mod 6 = 25 \mod 6$

or,  $(1 + 24N) \mod 6 = 1 \mod 6$

or,  $24N \mod 6 = 0 \mod 6$

The above constraint is always true, irrespective of the value of N. Therefore, the only constraints on testing if a number is Pentagonal is that 1 + 24 N must be a perfect square. A small caveat though is that we've used a squaring procedure to map x mod 6 to x^2 mod 6 - this mapping is not 1:1 since a squared number may have multiple roots in mod 6 space (indeed 1 mod 6 has two discrete square roots 1 mod 6 and 5 mod 6). What that means is that this test is actually necessary but not sufficient.

For numbers where (1 + 24 N) is a perfect square but sqrt(1 + 24 N) == 1 mod 6, the above squared equations are satisfied but they are not "normal" Pentagonal numbers. A quick glance will show that numbers which have sqrt(1 + 24 N) == 1 mod 6, when put into the formula for the root of the quadratic equation $n = \frac{1 - \sqrt{1 + 24 N}}{6}$  (note the negative sign) will always yield a value that is 0 mod 6 thus guaranteeing an integral value for n (though negative in sign).

In other words, either

$1 - \sqrt{1 + 24 N} = 0 \mod 6$

or

$1 + \sqrt{1 + 24 N} = 0 \mod 6$

always holds if (1 + 24 N) is a perfect square. Thus, we will always get an integral n (though not necessarily positive) as long as 1 + 24 N is a perfect square.

Therefore, in all cases, to test if a number is a Generalized Pentagonal Number, it is necessary and sufficient that (1 + 24 N) is a perfect square. If you want to stick to just non-Generalized Pentagonal numbers, then use the additional restriction that sqrt(1 + 24 N) mod 6 == 5. QED.

NOTE: A previous version of this post claimed the simpler test to be necessary and sufficient for non-Generalized Pentagonal Numbers. There was a flaw in the analysis and the post has been updated to indicate that the simpler test holds only for Generalized Pentagonal Numbers. Many thanks to Dave Evans for providing a detailed counterexample over email and apologies for the incorrect analysis and claim the first time around.

## Tuesday, May 29, 2012

### Fixing .innerHTML for the World

I filed Bug 17176 with the W3C a few days ago (my first on the HTML spec). The gory details are at  https://www.w3.org/Bugs/Public/show_bug.cgi?id=17176

Basically, I'm arguing for a consistent cross browser string representation of the DOM structure because it addresses a current technical need as well as is a "good to have" feature.

See the complete discussion there. Some of you might be interested. :)

## Monday, April 23, 2012

### My Blog is Too Geeky

It's a sad sad truth. I hope to change that someday. But that day doesn't seem to be coming soon enough.

## Sunday, April 22, 2012

### The Rise of China and the Emerging Markets

I'm posting a graph from Google Finance today. It graphs the relative movement of various currencies over the past few years. The graph is extremely interesting. The baseline for this graph is the USDCNY downward slope. View the other currencies against that baseline.

Some interesting observations:

1. The US Dollar has depreciated 20% against the Chinese Renminbi since late 2005. The other way to look at this statistic is that the Chinese Renminbi has appreciated 20% against the world standard currency - the dollar. That's because its exports are in much greater demand across the world and more so in America. America has a $295 billion trade deficit with China that is fueled primarily by American consumerism and its insatiable appetite for imported goods at low rates. 2. The US Dollar has appreciated 20% against the Indian Rupee since 2005 but we all know that the dollar isn't doing too well as a currency. What then explains this increase? The answer, my friend, lies in India's reckless profligacy. India has been running a current account deficit that it's government refuses to control (the money is being used for programs like NREGA, NHAI etc.). Foreign inflows are continually being used to finance the shortfall that the country's exchequer is facing and the situation is dire. RBI's comment on the matter? "The country's current account deficit is unsustainable." Note: As long as we're running a current account deficit, we're devaluing the currency with respect to the rest of the world because we're making interest payments in return for goods of no objective value (i.e. money in another currency). The resulting inflation in India is a testament to this devaluation. Another interesting fact to note is that the shortfall involved is 4.3% of India's GDP (NOT Tax Revenue). That figure is substantially greater than what we will be able to easily repay via tax collections since the money is being used essentially as handouts to the poor (e.g. NREGA) and not for setting up new industries or galvanizing rotting ones. 3. Given the above two points, it's entirely not surprising that the Chinese Renminbi has appreciated 60% over the Indian rupee since 2005. Of the 60%, 40% can be accounted for by taking the US dollar as the base currency for valuation: 1 USD buys 20% less CNY and 1 USD buys 20% more INR, therefore 40% of the currency gap is accounted for. The remaining 20% gap can only be explained by the enormous bilateral trade deficit (~$27 billion) that India runs with China.
4. However, these 3 points don't indicate the full story. Look at the graph for CNYJPY and compare that with USDJPY. The two graphs nearly mirror each other but sometime starting in 2007 and extending through most of 2008, there was a gap introduced between the values of the two currencies. The current value of that gap is around 20%. What does that mean? Why is the USD devaluing against JPY (down 20% since 2008)? Was it the financial crisis that caused this devaluation? Alternatively, is CNY devaluing against JPY? The second explanation seems more likely. The Japanese Yen seems to be becoming a stronger currency - especially since it is a hidden part of the US-China trade deficit (Bloomberg states that South Korea, Japan and Taiwan account for a $200 billion trade deficit that China runs against these countries. This makes sense if you realize that Chinese factories are assembly lines and the components are actually sourced from these countries). My inference from the above indicates that the rise of China will be accompanied by the rise of these 3 countries to a much greater extent than what is currently being expected. India is a sitting loser in this series since it's not part of this virtuous cycle of products being made, packaged and exported. We're sitting on a time bomb of "service exports" to developed countries while China is sitting on a gold mine of manufacturing goods ready to be sent to countries willing to pay for them. It's hard to realize it, but we're being run into the ground by international trade and we're paying heavily for it in terms of the future of our country. If you want to view the graph in all it's glory, have a look here. Look at it closely and draw your own conclusions. Let me know if you differ with my opinion. Have a good day in analysis! ## Saturday, April 14, 2012 ### C++: Some Frequently Questioned Answers Through a series of random mumblings too hard to explain here, I landed on this amazing thread on comp.lang.c++.moderated. Basically, the thread is a significant rant about why C++ is horrible and it posts a link to a site that actually rips apart the C++ FAQs. That site has taken up amazing amounts of the author's time and energy and definitely deserves a link here. My suggestion is that you take the time and go through the site here but if you just want to cut to the chase, here's a list of some articles that I went through: There's tons of other useful information on that site that you must experience for yourself. However, before leaving you, here's a bunch of other random stuff that I've been reading: 1. The fully legal Programming in Scala first edition ebook 2. The lawsuit between Oracle and Google: Can you Copyright Computer Languages? 3. A brief history of Microsoft's dirty legal tricks regarding Windows, MS Office and others. That's it for now. Catch you later. Good night! ## Tuesday, March 27, 2012 ### I Changed Google Not everyone can claim that they've changed Google for the world. But now I can. As a kid I wondered if I'd ever have the chance to work at Google. Today I'm really happy to claim that not only am I working at Google, I've also had the honor and opportunity to make a change that affects billions of people across the world. I'm one of the rare set of people who've had a chance to change the Google home page. It's a lifetime milestone for me. Thanks Google! Thanks everyone that made this possible! ## Monday, February 27, 2012 ### Biking in San Francisco: Embarcadero to Sausalito, Golden Gate Park  En route to the Golden Gate Bridge Let's move away from the techie nature of this blog for a bit. I've been out biking with friends lately. A couple of weeks ago, Siddharth, Divya, Karthik and I went biking. We took the famous Fisherman's Wharf to Sausalito route in San Francisco, going across the Golden Gate bridge and coming back by ferry (passing the famous Alcatraz Prison Island) to The Port of San Francisco. The route was extremely picturesque - the only issue was that my phone was dead. Therefore, please forgive the few pics that I've got of the occasion.  At the Golden Gate Park Today, I went biking with Venkat and Eric. We're on the same team at Google. Venkat is a super fitness enthusiast - he runs and bikes for miles at a time. A little known fact - he's done some classes on Martial Arts too. Eric's the workaholic who finds it preferable to be working at midnight on a Saturday night than going out and partying (please note: this is by his own (possibly one-off) admission - I don't claim that this will continue). I had loads of fun with them and I probably had the longest bike ride of my life till date (18.8 miles). Pics are below. Enjoy!  Statue at the Golden Gate Park  A fountain in front of the California Academy of Sciences  Blue Skies and a Picturesque View at an intersection  The Mission Dolores Basilica One of the oldest buildings in SF. More pics can be seen on my Google Plus photo album. Check it out! ## Saturday, February 04, 2012 ### The Facebook S1 Filing - Stay Away from the IPO: I mean it So, this evening, I finally took some time out of my really busy schedule of snacking on Pop Chips and drinking free soda at the Google microkitchens to read the Facebook S1 filing (PDF) (yes, I read that whole thing from cover to cover). It was an interesting read: full of financial mumbo jumbo that doesn't quite feel interesting until you start keeping track of who earns how much due to what deals struck between which parties. It's all pretty convoluted, yet pretty simple too. To make sense of everything in that document, all you need to do is to keep in mind the character played by Jesse Eisenberg in "The Social Network" (Trailer). Yeah, everything that that movie depicts - very likely true. So, before going ahead with my deconstruction of that opaque document full of legalese, here's my first reaction that I was about to post to Google+ before writing this post: Compare the S-1 IPO filing documents for Google (PDF) and Facebook(PDF). Look at the *DIAMETRICALLY* opposite views that Zuckerberg and Larry/Sergey hold of their investors. The Google S-1 is structured as a document that aims to inform investors as to why they should buy into the stock of the company for the long term at a sustainable price through a fair pricing mechanism and the Facebook S-1 is structured as a document that informs investors that they're going to lose money, their overpriced shares are going to be diluted upon purchase at the IPO, their IPO proceeds will go towards paying the taxman and not growing the company, decision making power is concentrated in the hands of the CEO (which is an official "risk factor" for the company), even directors, founders and significant shareholders have their voting powers pledged, there's no long term vision to speak of and retail investors should be prepared for everything going wrong. It all sounds pretty funky to me. I'd stay as far away from this as possible. Read it and see for yourself. Yeah. As you can see - the IPO isn't really encouraging through the spectacles I'm wearing, and here's why:  Image Credit: The Hacker News Let's start with the basics - if you have to buy shares in a company, how do you evaluate how much you should pay for them? Metric 1: The par or face value and PE The value of each share as issued by the company as a proxy of ownership on its assets. In the event of a bankruptcy, this is what the company will attempt to pay you when liquidating its assets after repaying its creditors. So, what's the par value of a Facebook share?$0.000006 - that's really a lot of money, isn't it? And what is Facebook (FB) asking per share? Let's take a round figure of about $30. Hmm 5 million times the face value? Something isn't right there, or is it? Well, in reality, most companies don't really trade close to their par values as the stock markets factor in intangible assets like smart people, software codebases (which really have an asset value of 0, but are presumably immensely valuable to companies like Apple, Google, Amazon etc.), market dominance, locked in customer relationships, contracts for future income etc. which naturally cause the market value to rise. A better understanding of the price of the share can be obtained by looking at the Price/Earnings ratio. Google (GOOG) has a PE of around 20 (and it's considered expensive), Apple (AAPL) has a PE of just 13 and it has a stock price going North all the way for the past 3 years and a cash chest comparable to a few small countries, Amazon (AMZN) is an exception to the rule with a PE of 136 but it has some funky accounting behind it. Effectively, its PE is around the Google range or slightly more expensive (I would love to cite a source on this, but I did this research some time ago and I don't remember the exact figures anymore). So, people, PE in this industry, even for hot companies should range in the range of 10-20. And how does Facebook fare in this regard? FB wants an IPO PE value of 100 (20x total revenue, not earnings) similar to what Google got in its IPO as part of it's growing phase, but isn't it obvious that Facebook is at the top of the S shaped growth curve? So, at the end of this all, effectively, the market value of this stock is in no way related to the actual brick and mortar assets of this company. Okay. Point noted. We need to look elsewhere to evaluate the assets of this company. So, let's start looking! Metric 2: How much money does this company earn per annum? That's a softball question. Here's the answer straight from the filing books:  Year Ended December 31, 2009 2010 2011 (in millions, except per share data) Consolidated Statements of Income Data: Revenue$ 777 $1,974$ 3,711 Costs and expenses(1): Cost of revenue 223 493 860 Marketing and sales 115 184 427 Research and development 87 144 388 General and administrative 90 121 280 Total costs and expenses 515 942 1,955 Income from operations 262 1,032 1,756 Other expense, net 8 24 61 Income before provision for income taxes 254 1,008 1,695 Provision for income taxes 25 402 695 Net income $229$ 606 $1,000 Net income attributable to Class A and Class B common stockholders$ 122 $372$ 668 Earnings per share attributable to Class A and Class B common stockholders(2): Basic $0.12$ 0.34 $0.52 Diluted$ 0.10 $0.28$ 0.46 Pro forma earnings per share attributable to Class A and Class B common stockholders(2): Basic $0.49 Diluted$ 0.43
Source: The S1 documents filed by Facebook with the SEC. Oh, and make sure you spend some time looking at the Marketing and Sales cost figures right beneath this table - they're going to be more representative of the company going ahead.

Okay, now let's back up a bit - this company, which gets revenues of around 4 billion dollars per annum and makes profits of 1 billion dollars per annum in its most profitable year till date is proposing to sell to the general public 5 billion dollars worth of paper that represents about 5-10% of the company? Hmmm... Come again?

Okay. Let me put it this way: Let's say that I'm a working guy and I have an income of 1 billion dollars. I tell you - hey! I'm probably going to be working for 100 years, so in this time I will have earned 100 billion dollars - pay me 5 billion dollars now and I'll put 5% of my salary in your bank account for the next 100 years. If I go bankrupt before then, I'll just pay you $5000. Would you do that? That too when the guy's in the technology sector where his peers don't even last for 5 years? (Remember Orkut? or Myspace?) Oh, and by the way, after giving FB 5 billion dollars, you won't even have a say in the way the company functions - Mark Zuckerberg holds all the voting power via Class B voting stocks (10 votes per share) and at the IPO you'll just be given the stupidly standard Class A (1 vote per share) common stock. So, effectively, in the words of the esteemed Washington Post (whose CEO is an FB board member by the way) - The public will hold "a majority economic position and a minority voting position" Rather unfair isn't it? Gambling with other people's money? Oh, and by the way, as part of the risk factors mentioned in the prospectus, one of the risk factors to the company is the CEO himself (S1 pg. 20). How ironic. At the end of it all, let's do some maths: Let's buy 1 GOOG share at$600 and the equivalent FB shares at $30 apiece. GOOG has an Earnings Per Share of around$29-30. FB has an EPS of $0.47 this year and we can buy 20 FB shares at the same price. So, share to share, GOOG earns$30 against FB's $8. Okay, so let's give the little kiddo the benefit of the doubt - he's going to grow rapidly: FB -$8, $12,$18, $27 - growing at 50% year on year giving it approximately 50% of the world population as monthly ACTIVE members at the end of 4 years. Wildly optimistic scenario? Well... even if Google just maintains its current earnings, the net earnings for the shares held would exceed that of FB over these 4 years. So, why should you pay this much? The answer, dear investor, is not to pay! And to give you further fortitude, Forbes agrees with me on this! Metric 3: How much earning potential does it still have?  Image Credit: www.pokerblog.com Facebook has about 800 million monthly active users. If it continues its current rate of exponential growth, it will exceed the projected world population of 8 billion people in about 4 years or so? Take it from me, friend, that isn't going to happen as that will include every single man, woman and child on this planet Earth. So the long term outlook of this company indicates moderating growth unless it can find other sources of revenue (more Zynga gamers, more payments, deals, local etc.). Given the way things are going, I strongly believe that this company is setting itself up for disappointment. (And I'm not the only one. Check out Forbes' analysis of hype versus substance and Reuters sobering look at Facebook for starters.) For context, see the way that Zynga, Pandora, and LinkedIn have performed post their much hyped IPOs - they're all trading well below their IPO prices today. Given how much FB is overvalued, I really doubt that the hype can save it. So, what's the saving grace? Well, the ace up Facebook's sleeve is the fact that it doesn't serve even a single mobile ad on its apps. All this income is just from desktop apps. Given that Facebook is the number one downloaded mobile app across all mobile categories, the day those floodgates open, Facebook will directly bump up its revenue in an instant. So just wait: Facebook will launch mobile ads soon before or just after its IPO and its stock price is going to hit the roof! That's their crown jewel and that's what their investors are depending on to cash out of this company. Final words It would have been awesome if the Facebook filing showcased that the people in the company had matured and had a long term future for the company. Just look at the Google guys! But, sadly, that is not to be. Facebook doesn't have any plans for the money it will raise from the IPO and all the shares that Mr. Zuckerberg is selling to the public will be used to pay down the tax that he will owe in exercising his own options to buy himself more Class B voting shares. I shan't bore you further with the details (Goldman Sachs losing out to Morgan Stanley in being the underwriters of the final offer despite being the ones originally valuing the company at$50b to secure a huge chunk of shares to sell privately; a \$2.5b unused line of credit for a cash and pre-IPO equity rich company solely to provide income to the banks that back it etc. etc.). Suffice to know that this stock is a Wall Street mud pit and as a retail investor, you should stay away from it. Oh, any by the way, if you don't agree with me, feel free to drop me an email or write a comment below (comments are moderated, spammers, please stay away).

Postscript

Forbes has consistently been bearish on Facebook valuations. You might have fun playing around with Trefis' analysis of FB's stock price (slightly outdated PDF). Check it out! Hopefully, they'll have an updated analysis based on the recent S1 filing soon enough.

Also, before leaving, please checkout the ever newsworthy Mashable's Facebook Hall of "Fame" Infographic.

Hope you've made up your mind now! Take care and invest wisely! :)

## Saturday, January 07, 2012

### Blogs mature over time

It's interesting to look at how my blog has grown over the years. It shows how lopsided the internet is in terms of traffic. The data speaks for itself: