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Mayor of New York Michael Bloomberg delivers Keynote Address at Five Borough Chamber of Commerce's Inaugural New York City Xpo for Business, Nov 29, 2006

Founder of Bloomberg LP Michael R. Bloomberg is the 108th Mayor of the City of New York. He was born on February 14, 1942 and raised in Medford, Massachusetts, where his father was the bookkeeper at a local dairy. Mayor Bloomberg's thirst for information and fascination with technology was evident at an early age, and led him to Johns Hopkins University, where he parked cars and took out loans to finance his education. After his college graduation, he gained an MBA from Harvard and in the summer of 1966, he was hired by Salomon Brothers to work on Wall Street.

He quickly advanced through the ranks, and became a partner in 1972. Soon after, he was supervising all of Salomon's stock trading, sales and later, its information systems. He was fired in 1981 after another company acquired Salomon. Michael Bloomberg used his stake from the Salomon sale to start his own company, an endeavor that would revolutionize the way that Wall Street does business. As a young trader, he had been amazed at the archaic nature in which information was stored. When he needed to see how a stock had been trading three weeks ago, he had to find a copy of the Wall Street Journal from the date in question, and the records system consisted of clerks penciling trades in oversize ledgers. So, he created a financial information computer that would collect and analyze different combinations of past and present securities data and deliver it immediately to the user.

As the business proved its viability, the company branched out and in 1990 Bloomberg LP entered the media business, launching a news service, and then radio, television, Internet, and publishing operations.

Bloomberg LP

Bloomberg LP is a private company and is not required to publicly report its earnings, making it impossible to determine its exact value. But the company's revenue streams are relatively easy to follow.

In Nov 2006, The New York Sun reported that the company derives most of its profits from its famed terminals, which sit atop the desks of thousands of traders, investment bankers, and financial analysts across the globe.

In 1982, Bloomberg L.P. sold 20 subscriptions to its service; 25 years on, Bloomberg LP  has continues going through a huge growth spurt. In 1995, it had 52,000 terminals. By 2001, the number shot up to 156,000 terminals. Last year a New York Times story estimated the number at more than 200,000. And  in November, a spokeswoman for the company, Judith Czelusniak, said the company has about 260,000 terminals and almost 300,000 users.

The New York Sun says that at a rate of $1,425 a month, the machines bring in more than $4.4 billion a year (the company is known for its no discount policy even when leasing a single company hundreds of machines). That revenue estimate dwarfs companies such as the New York Times Co., which had 2005 revenues of $3.4 billion, and the publisher of the Wall Street Journal, Dow Jones, which had 2005 revenue of $1.8 billion. Bloomberg's costs are lower than newspapers because its product is distributed over the Internet. There is no need for newsprint, presses, or delivery trucks.

The newspaper says that in 2001, Business Week reported that Bloomberg had a 20% profit margin. Given the double-digit growth of the company in the years since and the spike in the number of terminals it leases, that margin is likely to be at least 35% and could be higher. The high fixed costs of the business mean the company increases its profits as sales take off. According to a Forbes list of America's largest private companies, Bloomberg LP saw a 13% increase in revenue in 2005.

The 35% margin would dictate $2.9 billion in expenses for everything from Bloomberg's 9,000 employees to its rent to its electrical bills and equipment. It means the company is netting at least $1.5 billion a year pre-tax, making Mr. Bloomberg's annual pre-tax income more than $1 billion. That is, of course, in addition to the symbolic $1 a year he accepts from his job as mayor. How much would that cash flow be worth to a buyer? Businesses with good growth and dominant market position can be valued at 15 times their pre-tax earnings. Using that multiple, Bloomberg LP's $1.5 billion of pre-tax income makes the company worth $22.5 billion. And if the companies operating margins are higher, as some suspect, the company and the mayor's wealth, could be materially greater. If the company is worth $22.5 billion, the mayor's stake would be $16.2 billion.

California Governor Arnold Schwarzenegger and New York Mayor Michael Bloomberg campaign for new technology to fight global warming: