Archive for October, 2005

My daughter is a princess for Halloween.  Was speaking to another father whose little girl is also going to be a princess.
My friend asked me, "which one?"
I said, "I don’t know.  The good princess kind."
He said, "better be careful, princesses are role models… and there are some pretty bad princess role models out there."
"Yep.  Take Ariel from the Little Mermaid.  Basically told the dad to shove it and made a deal with the devil.  Classic stuff.  The dad had to eventually go to hell to save her."
"No foolin’.  Not something I want my little girl to model after."
I said, "wow, I hadn’t thought of it that way."
He said, "oh, believe me, you will.  How about that Belle in Beauty & The Beast?  Chick dates animals, for cryin’ out loud."
I responded with a shiver and went silent for a moment.  Then I had a thought:  "I see what you mean.  Hmmm.  Even Snow White hung out with a pretty motley crowd… a bunch of sloppy under-achievers, eh?"
"Yes, yes, that’s right!" he said enthusiastically, seeing that I was finally clueing in to this modern day dad dilemma.
I was dazed.  A world that I thought was innocent and safe was now riddled with danger and questionable behavior.
" ‘Bout the best princess role model out there is Cinderella," he finally ventured.
My brow furrowed.  I was suddenly distrustful of all princesses.
"No, seriously," he said sensing my angst.  "Think about it.  Great work ethic and a phenomenal attitude, especially with such a rough upbringing.  Always presentable.  Likes gardening.  Can dance up a storm.  See what I mean?"
Again, a bit of silence, until I said, "yes, but it would have been good if she went to college and was more of a self-made woman, not completely constrained by that Prince Charming thing, don’t you think?"
It was his turn to furrow his brow.  "Hmmm.  Bummer, maybe she’s not such a great role model, either."
We both stood there, bobbing our heads in a faint, resigned way, reaching that wall of inevitability:  Where have all the good princesses gone?
I could only think of one thing:  As a female role model, good thing her mom is as good as gold!
Don’t think traditional media companies are feeling the heat from online folks?
That tabloid-like quote came from Martin Sorrell, CEO of WPP, the world’s second-largest advertising company.  Mr. Sorrell spoke at a recent Internet Advertising Bureau (IAB) conference.
Surprisingly candid, here are some choice tidbits:
     "Media companies like News Corp. are on the verge of panic amid seismic shifts brought on by the Internet."
     "Declining circulation, viewership and revenue figures had big media companies running scared."
     "Most of these companies, ours included I suppose, are run by 50- or 60-year-olds who have trouble getting it, and who really don’t want to see change on their watch."
My second instinct — as a business person — is to revel in yet another piece of validation that online advertising will continue to explode through the end of the decade.
My first instinct, though — as a human being — is a momentary sense of sadness… same twinge felt whenever something’s time has come.
Was talking with a friend today that suggested iPod’s are just reincarnated pocket transistor radios — you know, the kind we all carried around so we could listen to a virtually endless supply of free music that we loved?
The more things change, the more they stay the same.

Yet Another Ugly Headline

Posted: October 24, 2005 in Uncategorized
While we’re on butchered headlines, let’s look at Intel (INTC).
Last week, INTC reported 32 cents per share.  Estimates were expecting 33 cents.  All the headlines read:
     Intel misses
But, INTC had a 2 cent non-recurring legal charge that should have been added back into INTC’s results.
So INTC actually posted 33 cents and beat estimates.
I don’t have to tell you what a huge difference "beats" vs. "misses" means in the world of investing… especially for one of the two great tech bell weathers.
Just try to find a journalist who reported that — or even revised their original report. 
Even as he reinforces the mistake, Bill Snyder of is about the only one to even mention a possible confusion.  (His cohort at Richard Suttmeier did in an earlier story as well.)
Doesn’t matter — shame on INTC’s Investor Relations folks for mucking up something so simple as giving clear information in the first place.
P.S.  How powerful is this effect?  Google (GOOG) mucked up their 2nd quarter report in a similar way — actually beating estimates but not presenting the information in a clear way.  The result was GOOG treaded water the entire 3rd quarter.
P.P.S.  How does negativity spread?  Take INTC’s statement that it’s selling absolutely everything it can make.  Sound pretty positive, eh?  Once you’re in a negative press groove, though, what gets reported is, "the company expects to have capacity issues in the 4th quarter."  Go figure.  We should all be so lucky as to have our demand through the roof.

Tale of Two Headlines

Posted: October 21, 2005 in Uncategorized
Headlines do fool people.
Take Yahoo’s (YHOO) earning announcement on Tues (Oct 18).  Most of the headlines were:
     Yahoo Earnings Flat
YHOO was actually down after that headline… and rose only modestly in the after hours market.
Take Google’s (GOOG) earning announcement on Thur (Oct 20):  Headlines screamed:
     Google Net Surges Sevenfold
GOOG was up a whopping $25-$30 or so (about 8-10%) in the after hours market.
Now, I’m a fan of both YHOO and GOOG (and MSN and AOL) since I think the online advertising market will explode the rest of the decade.
But, I have to take a moment to dissect both headlines.
YHOO is being compared against a quarter that included a huge stock gain.  Take the stock gain out of the equation to get the real operating performance — which analysts and reporters are supposed to be smart enough to know — and the results look stunningly different:
     YHOO:  100% earnings growth (8 cents vs. 16 cents).
A far cry from flat.
GOOG is being compared against a quarter that included a huge stock payout.  Add that back into the equation to get the real operating performance — which again analysts and reporters are supposed to be smart enough to know — and the results also look stunningly differently:
     GOOG:  50% earnings growth ($253 million vs. $381 million).
A far cry from 7x.
My point:  Headlines do matter in the short run.  Especially the wrong ones.
P.S.  Both YHOO and GOOG beat analyst’s earning and revenue estimates.
P.P.S.  The market somewhat corrected itself the next day, sending YHOO shares up about 6.5%.  But I wonder how much higher they could have soared had the headlines been — deservedly — as wildly positively as Google’s?
P.P.P.S.  Long run the marketing is always right.  Overall GOOG is outperforming YHOO because GOOG is growing its revenues twice as fast as YHOO and that will eventually show up in earnings.
P.P.P.P.S.  Let’s not forget, though, both companies are doing phenomenally well… absolutely running circles around the rest of the market.

Don’t Sell… Tell

Posted: October 20, 2005 in Uncategorized
The best phrase that came out of DMA ’05 to describe blog marketing:  "Don’t Sell:  Tell."
That, ladies and gentlemen, is the magic formula.

DMA ’05: From #165 to #2

Posted: October 17, 2005 in Uncategorized
Last year, we practically begged the DMA (Direct Marketing Association) to include a panel on RSS and alerts.
Wait a minute, we did beg.
It was the very, very, very last panel on the schedule… panel # 165.
Ever stayed for the very, very, very last panel at a conference?  Yes, well, that explains why there were only a few dozen hearty souls that attended.
Bully for them, they got the head start!
Fast forward 12 months. 
I’m in Atlanta for this year’s giant DMA conference.
We’re now in what show organizers call the "spotlight session"… essentially the #2 positioned session of the conference!
What a difference a year makes… you think RSS has people’s attentions now?
I think I just saw the exact moment a sleeping giant awoke.  Microsoft is now officially pissed.
So here’s my blog observation:
I’ve always said Microsoft wins because at critically crucial crossroads, it figures out how to adapt, then competes like the heavy-weight prize fighter it is.
Think IBM & OS/2.
Think desktop applications.
Think browsers.
Think completely trashing a $1.5 billion investment in a proprietary network to embrace "the Internet." 
Microsoft gets on the ropes, regroups, figures it out, and regardless of cost (since Microsoft has all the money in the world), starts pummeling. 
And getting bloody. 
Not to be misunderstood:  I firmly believe that the online advertising space is going to get SO BIG that all the big players are going to get fat for the rest of the decade, most especially Google and Yahoo. 
But, anyone that thinks Microsoft is already down-for-the-count is — to their eventual chagrin — going to get blindsided.
This isn’t just me "drinking the kool-aid," it’s history:  It’s just how things work around here.
One of the best analysts around, Safa Rashtchy of PiperJaffray, held what was probably the most interesting and entertaining session at Web 2.0.
(Disclaimer:  Safa was one of a half dozen or so analysts who covered back in the day.)
Safa got together a group of five teens — ages 15 through 18 — and asked them tech questions. 
Could have been a disaster, but as is so often the case with youth and innocence, the entire session was delightfully entertaining and incredibly informative.
No doubt, these kids were way tech-savvy. 
For example, Safa was trying to get a sense of where these kids buy things online… and asked the question, "Suppose you were buying a CD player… " … to which they all responded in a dumbfounded way, "why would we ever buy a CD player?
As in, this is truly the MP3/flash memory/Bit Torrent/iPod generation.
What blew me — and the entire audience — away, though, was these very tech savvy kids knew nothing about Skype — the nearly free VoIP telephone service — even with its $4.1 billion acquisition by eBay splattered all over the news.
Kids who virtually live in cyberspace not knowing anything about free phone calls?  That’s almost impossible to comprehend.
Unless, of course, you think about who pays their phone bill.
Ah, their parents.
Now things make more sense. <grin><groan>
In the 80’s and 90’s — some would say the golden age in high-tech — major tectonic shifts were measured with the introduction of new Intel processors.
The 8088 (PC).  80286 (PC AT).  80386.  80468.
Each processor generation allowed a magnitude more stuff to be done than the previous generation.
Of particular note, this was the main engine driving the entire software industry, which significantly benefited from the inevitable upgrade cycles.
People like numbers.  They’re easy to remember.  And they describe just what you want them to describe:  Where you’re at in a sequence… i.e., "what’s the latest."
Amazingly, Intel did the unthinkable:  It stepped away from simple numbering.
So where does that put us today?
Who knows!  And that’s the problem.
Other than IT geeks, does anyone know what generation of processor we’re on now?  Pentium something?  Is it still even called the Pentium??
Why do I need to upgrade? I’ve got a Pentium — the latest — don’t I?
This thought occurred to me as I was thinking about the name of the Web 2.0 conference — so named because we’re on to the next generation of Web activities as compared to the early days of the Web… the "Web 1.0" days.
I know there was a bunch of legal issues trademarking a simple number.  Doesn’t matter, creative people could have gotten around that.
Bottomline is Intel blew it.  They fumbled away a once in a lifetime opportunity to be completely and utterly associated with what the current generation of high-tech is called.
Web 1.0 started in the mid-90’s.  Web 2.0 around now, the mid-00’s.  Maybe the real reason the bubble burst was we didn’t have a simple name for why we needed to upgrade around 2000.
And therefore, no one did.
Hopefully, "Web 2.0" gets us back on track.
At the Web 2.0 conference… great event put on by uber smart guy John Battelle.
Not sure why any of the other big news services didn’t catch this… so I have the scoop!
Last night, Microsoft sponsored the dinner.
Strategically missing was dessert.
To get dessert, you had to go to the after-hours party that Google sponsored.
A ha! 
Is this the first very public, very strategic act of coordination and cooperation?!
I believe it is.
You heard it here first.