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In Twitter IPO, It's Not the Margins That Kill -- It's the Multiples

NEW YORK (TheStreet) -- When it comes to Twitter -- and for that, matter Google (GOOG) and Facebook (FB) and LinkedIn (LNKD) and all the rest of the pure-play Internet companies -- it isn't the margins that get you murdered.

It's the macroeconomics.

Is it just me, or is everybody fighting major mental lactic acid buildup tracking the ludicrous looming Twitter IPO narrative? By now, I should be ravenous for the inside dirt on the operation, like New York Times columnist Nick Bilton's bare-knuckled tell-all on Twitter exec Jack Dorsey throwing his buddy Evan Williams under the bus to gain control of the company.

I know I certainly ought to have dissected many times over Twitter's pre-IPO, S-1 Securities and Exchange Commission disclosures of soaring $316 million 2012 revenues looking for inconsistencies. And I should be fascinated by how the once-vaulted New York Stock Exchange has been reduced to -- a la Bialystock and Bloom of The Producers fame -- running what amounts to a full dress rehearsal for the public offering, probably around Thanksgiving, to be sure all goes as planned.

But none of that -- or really, anything else about Twitter -- gets me anywhere close to overcoming the mental bone weariness of covering yet another wave of investors about to get mowed down by the same old Information Age fact: When it comes to tech, the company story is only half about the price of the stock. The other half is the available wealth in investors' pockets to pay that price for the stock.

And, according to alarming new figures from Bureau of Labor Statistics, the core, large-scale macroeconomic productivity that drives demand for tech equities is bleeding from the Information economy like just so many Justin Bieber tweets. 


The less-productive information economy
In late September, the U.S. Department of Labor published its latest data on Multifactor Productivity for Manufacturing Industries (2011 is the latest year for it has released such findings). Here the combined inputs, outputs and total multifactor productivity were ranked and compared for all American market verticals. Percentage gains and losses for everything from motor vehicles to medical equipment, turbines and transmission equipment -- and, yes, computer and peripheral equipment -- were ranked and compared.

Not only did the computer and peripheral sector lead the decline in total productivity, but its drop was in the double digits, falling by easily in the upper mid-20% range by some measures -- despite an overall increase in generic semiconductors and electronics components.

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