Archive for March, 2008

I’m in shock.
A friend, Don Hichens, just passed.  Tongue cancer.  He was a young man.  Boy did we love playing cards together, he was always up for a game.  A genuine guy.  Once he asked me to speak to his daughter about "tech careers" and I remember having a big ‘ole S.E.G. on my face the entire time:  "Do you know how great your dad is?  No, really, do you know?" 
She did know and beamed.
My Dad used to say:  "When God wants you, he’ll take you."
God took this one too soon.

More Data Is Better

Posted: March 26, 2008 in Technology and Business
That will add fuel to the bear’s fire tomorrow.
As I’ve always said, more data is better.  Not that anyone will find that last piece… it was buried at the end of an article.
Also glossed over today is the following headline:  Google gains search share, Yahoo, Microsoft decline
Unfortunately, you can never fight the trend in the short-run.
Anyone that studies military history knows that everyone fights the last war.
That is, countries use the lessons from the last war in setting strategy and tactics for this war.  Can’t really blame people for this, it’s human nature to have a bias for things we know.
But, this has never worked.  (Maginot Line anyone?)
And, once again, it’s not working now.
So while the threat is real — and we should defend ourselves — our approach is broken.
Need proof?  Pro-war folks enthusiastically tout how much progress we’ve made in the last few years.  But ask those very same people how long the war is going to last and they’ll say, "25-30 years."
25-30 years.
25-30 years?!  That’s progress?!  Anyone remember signing up for a 25-30 year convention war?!
Given our approach — essentially alienating almost all of our potential allies — we can’t even make this a world effort as it should be.
Five years of war and what has that gotten us?  Maybe we’re safer or maybe we’ve inspired a new generation to hate us, you toss the coin.  Our name is mud all around the world.  The dollar is at an all-time low.  Oil is at an all-time high.  All while our homeland is under siege by, well, you read the papers:  Pretty much everything.
We may be winning the battle but we’re losing the war.
No, there is only one thing we can do to fix this:  Fight smarter, not harder.
Has anyone noticed there is no giant armies waging war on giant battle fields?  Why are we fighting as such?
This should be a covert war.  This should be a team (world) effort.  Instead of spending a trillion or two, we should be spending a faction in covert stuff coordinated by all the peoples of the world that want to stomp out terrorism.
Too simplistic?  Think of what an amazing job the terrorists have done on a shoe-string budget.
Makes me uncomfortable when I hear hawks complain that terrorists are cowards.  Reminds me of the kind of bitching the British Army did when they complained revolutionary patriots were cowards for "not playing fair and shooting British officers" or taking cover behind trees when faced with a wall of rifles.
Our patriots didn’t have a choice.  So they improvised.  Brilliantly.  And it worked because the Brits were using outdated tactics.
So on this 5th anniversary of the Iraq War, here’s what I say:  Grow up.  We should defend ourselves.  But we need to fight a modern war.  That means a smart war.  And a worldwide effort.
Unless, of course, we really want to be fighting this kind of war for another 25 years.
[Note:  This post originally started on March 17th!]
Throughout history — whether it’s their fault or not — the Irish have ended up with the short stick.
Until now.
Until technology.
I’m one of two Greek-Irish guys in the tech industry.  (Explains a lot for those that know me. <chagrined grin> ) 
In the 70’s, I spent a few summers in Ireland working at my cousins’ riding school.  Such wonderful adventures and memories for me. 
As for the Irish, though, life was not grand, that was plain to see.  In fact, it felt downright poor.  You could see it in the people’s eyes:  Hopelessness.  It was like the Irish couldn’t get a lucky break — or better said — couldn’t make a lucky break for themselves.
About twenty years ago (give or take), someone smart said, "hey, these technology companies are doing pretty well.  Let’s see if we can get some of them to base their operations here.  We have a lot to offer!  We have an educated, english-speaking workforce.  And we’ll be as business friendly as a four-leaf clover!"
Ireland undid what it failed to do for centuries:  Transformed itself into a economic powerhouse.
How do I know this?  We had a family reunion a few years back.  Prices were through the roof (and it wasn’t just euro-appreciation).  Standard of living noticeably higher.  Trappings of a wealthy community were obvious. 
The kicker was going back to the old riding school.  A massive residential development sprang in all directions from the main facility… the kind you only get when there is a growing population and lots and lots of jobs.
To my point:  Technology does indeed work in mysterious ways!
Happy, well-deserved St. Patrick’s Day to one & all!
The Bear Stearns news this weekend could not have been worse. 
Bear Stearns, one of the big banks, collapsed on Sunday. 
Even with the Fed springing into action, international markets were all getting crushed, some down 4% or more. 
U.S. Futures were all pointing to our markets getting crushed, too:  It should have been Bloody Monday.
But it wasn’t.
Nasdaq took a pop to the chin, but the Dow actually finished up.
While economic life will continue to be challenging in the short-run, this is just another data point suggesting the market may have most of the bad news factored in already.
Henry Blodget’s Silicon Insider had a quick piece today that does a nice job articulating yet another reason I’m a big fan of Google’s.
As painful as it is sometimes, I’m still the most optimistic guy in the world about online advertising.
I’ve often said that I think there’s enough room for lots of players, including YHOO.
Unfortunately, there’s lots of room long term.
But given MSFT’s unsolicited bid, YHOO no longer has a long term.
Short term, I think it might be checkmate… they have one potential move left… and that’s to beat earnings soundly.
Unfortunately (there’s that word again), I’m not sure we’ve seen any data in the market that could support a big upside surprise for them.  (GOOG’s latest Comscore numbers ticked up while YHOO’s down.)
More than that, a company carries themselves a certain way when they know their quarter is in the bag.  Vice presidents on panels and conferences say things like, well, what GOOG and Cisco have been saying:  "No, we’re not seeing the malaise hit our business, in fact, we’re seeing positive signs, especially Internationally."
YHOO’s been quiet as a mouse.
If I were MSFT, I’d pull my bid for YHOO and let the stock tank to the low teens… that ugly, ugly downwards momentum might even carry YHOO into the high single digits.
Yes, I know, that’s a 2/3rd valuation haircut… a 2/3rds valuation haircut would just put YHOO’s forward P/E in range with GOOG, MSFT, VCLK, etc… even though each of those companies are out-growing revenues 6x, 4x, and almost 2x respectively!
Then, I’d re-submit my bid mid-to-high teens… which will be about 50%+ premium… but save MSFT about $20 billion… a fraction of which I would use to create too-good-to-turn-down incentive packages for just the killer Yahoo employees (the deadwood can go).
Interestingly, if they keep a 50% cash/50% stock offer, MSFT stock would probably rise 5 points or so since now the market wouldn’t think they were grossly overpaying.  This, in turn, would raise the offer price by a few bucks.  Win-win for all.
If YHOO had more time, of course they could right this situation.
But, they’ve got what amounts to one full-court shot left with 0:01 seconds left on the clock.
22 April 2008 UPDATE:  YHOO missed the shot.
Where the hell have I been??
Some welcome back, eh?
It’s been a rough couple months.
Regardless of specifics (like Google marketshare growing again in February), here’s the question everyone is asking:  How do we know when we’re at a bottom?
There are a few general predictors.
One of them is the contrarian predictor:  When everyone says one thing, the other thing is about to happen.  Obviously, just about everyone in the entire world is negative right now.
Another is the when-bad-news-doesn’t-hurt predictor.  We may have seen this one this morning:  Intel revised margin expectations downward and was poised to crush the market in the pre-open.  But it didn’t… the stock was only down modestly in the early going… and only closed down by 1 penny by the end of the day.
Another is usually referred to as the "final capitulation."  That is, when the market gives out one final gasp lower in a low volume way… almost as if everyone is just too exhaust to trade anymore.  I’m not sure if the precipitous declines, taken together, qualify, but then, we are only talking about general predictors here.
The final one is this:  Since the market generally reflects where we’ll be at over the next 12 months, the big question is this:  Where will we be over the next year?  Here’s what’s scheduled:
*  The Olympics. 
*  New President. 
*  Modification to our war strategy, either a more effective one or an end. 
*  Improving statue in the world means improving dollar means lower oil prices.  (A lot of oil’s rise is tied to the dollar’s decline since oil is tied to the dollar.)
*  The rally behind "green" will help, too, it’s amazing what America can do when we set our minds to it.
*  The global economy still growing and benefiting U.S. companies who, increasingly, get more than half of their revenues outside the U.S. 
*  Online media still growing at the expense of traditional media. 
*  A lot of these interest rate cuts and stimulus packages and such kicking in.
Except for the uncertainty of whether we’ll see a "final capitulation" or, in fact, have already seen it, I’m going to can stick my neck out and predict that we are, indeed, at the bottom.
So, welcome back to the next bull market.  Which will look a lot like the last one.