Dealbreakers take on Google CEO Schmidt joining Apple’s board of directors is too funny not to share, and conveys an attitude that should be applied to every announcement Google makes.
Archive for August, 2006
Vitesse Semiconductor Corp (VTSS) is mentioned yet again in today’s WSJ. Bondholders are descending on companies who have failed to file financial statements with the SEC due to options backdating investigations. Technically, these companies are in default and bondholders can demand immediate repayment. If the company cannot pay, they could be forced into bankruptcy.
I just discovered that Global Crossing (GLBC) has an excellent corporate blog that is admirable for it’s lack of corporate-speak and full-frontal opinion.
Niall Ferguson’s paper caught my attention. He investigates how investors mispriced bond market risk in the years leading up to World War One- bond market yields fell and risk premiums shrunk right up to one week prior to the start of hostilities.
Apple (AAPL) has come under fire for using sweatshop labor to assemble your precious iPod.
Seeking to avoid the PR disaster faced when Nike’s manufacturing facilities were profiled in the early 90’s, Apple launched an investigation and issued a preliminary report. Some excerpts are worth sharing in order to understand the scale of outsourced Chinese manufacturing.
A final injunction has been handed down by the Texas court handling the Tivo-Echostar patent infringement case. Echostar will not only pay $89M in cash damages, but will also have to disable nearly all customer DVR’s in the field within 30 days.
In a press release, Echostar will now appeal at a federal level. They also indicate that existing customers are not impacted by this court order, even though a scan of the court order clearly shows that they must cease operating all but 100k+ of their DVRs. That’s right, they need to settle or shut down all of their customer DVRs.
The WSJ today has an exclusive look (free version of article here) at a report to be released by CableLabs that outlines the potential need for cablecos to undertake a massive infrastructure upgrade in order to stay competitive. Unfortunately, the report is not yet available to non CableLabs members, though we would sure like to get our hands on one (HINT HINT HINT) and CableLabs has informed me it never will be.
The report, which has been reviewed by The Wall Street Journal, warns that at present growth rates cable operators’ existing technology may not be able to compete efficiently with Verizon on Internet services. “At some point, optimization of the (cable) network becomes more expensive than simply deploying” fiber directly to homes, the report warns.
The WSJ discusses (free link) Googles (GOOG) push to mend fences with content owners and creators and strike advertising revenue sharing deals. Google is the undisputed efficiency and size leader of connecting on-line advertisers with on-line consumers, with the exception of Yahoo! in banner advertisement.
Akamai Technologies Inc. (AKAM) is the undisputed leader (80% share) of content distrubution infrastructure. When you stream video or iTunes, it is probably coming from an Akamai server and not NBC or Apple. Akamai simply takes bits from one of it’s customers, like NBC, and ensures a quality viewer experience. NBC puts the ads into or around the video you watch.
No one, as of yet, has really started to successfully implement user-targeted video advertisements. Brightcove is trying to do this, but most online video advertisements are sold by the content creators themselves. If you watch the Sci-Fi channel online, you see ads that NBC sold to it’s existing advertising partners. In the web world, most sites outsource the selling of ad space on their sites to Google, Yahoo, etc.
It is this transition that will catalyze an inevitable conflict between Akamai and Google.
Continue reading ‘The Inevitable Competition of Akamai and Google’
Businessweek writes about T-mobile and a new service they are rolling out using UMA phones (dual GSM/WiFi). These new mobile phones make use of the WiFi network and broadband connection in a users home to make phone calls off the GSM or cellular network.
Contrary to popular opinion, the real threat to the baby bells residential phone business is not the cableco’s VoIP but wireless substitution. Competition from cell phones was eating away at residential lines long before the cablecos began deploying voice services.
Most baby bells already have a wireless infrastructure. None of the cablecos do. This is why the Baby Bells ultimately have the upper hand over the cableco in the battle for residential subscribers. They can migrate their customers (and their phone numbers) to a wireless infrastructure, and Comcast (CMCSA) / Cablevision (CVC) /Time Warner (TWX) cannot. Comcast can migrate customers to Sprint/Nextel (S ), but without owning the infrastructure they won’t extract maximum value.
Wireless is the commanding heights and the most important infrastructure to own and operate in a voice network. Everything else is a commodity.
New Jersey recently passed a law allowing carriers to negotiate municpal video franchise agreements at the state level. This removes the uncertainty involved with multiple negotiations with multiple municipalities demanding multiple perks.
I witnessed the process first-hand by attending a local municpal hearing in MA for Verizon (VZ) FiOS TV service (see Blogging a FiOS TV Franchise Meeting). It is a pathetic process designed to extort tribute from companies while delaying the advent of competition for consumers.
It looks like municipalitites in New Hampshire will now reap what they sow.
From the Portsmouth Herald:
Jill Wurm (Verizon spokeperson) said this week that the company has sent equipment and franchise negotiators intended for New Hampshire to New Jersey, where a single franchise agreement can be negotiated at the state level.
Verizon would have to negotiate with each of the 23 New Hampshire communities in which it has installed fiber optic cable and pay them a franchise fee.
“So, since that’s the mode of operation in New Hampshire, everything … got reallocated,” Wurm said.
… and citizens of those 23 towns will lack effective cable competition in the meantime.
Activism in technology stocks is long overdue and it is refreshing to see it taking root. Robert Chapman is turning his attention to a company in a sector in dire need of external consolidation forces.
Continue reading ‘WSJ Profiles Robert Chapman, Vitesse Activist’
Centillium Communications (NASDAQ CTLM) has a troubled past and present but the market has mispriced even the most pessimistic scenarios at this point, short of accounting fraud. With proper investor activism this value could be extracted through consolidation, liquidation, or private turnaround scenarios.
Here’s a snippet of a conversation I recently had with a private fund manager. We were discussing the decreasing role Wall St. firms play in providing unique investment insights to their clients.
Andrew: What does it mean for Wall St. as their middleman position is eroded? They no longer control the information flow, and the little they do have on money flows shouldn’t be but probably is utilized.
Anonymous: I think you are already seeing it in a few ways. The pairing of research with trading capability is rapidly coming unwound to the point where people like fido (Fidelity) are paying separately for it. Execution has become a commodity with very low prices and research is getting priced much closer to its true value.
Another response is that the street has started to try to control face to face access to management teams. Increasingly, small companies with limited research coverage that come through NYC will let a broker book all their appointments for them, and won’t meet with you independently, thus forcing you to have a trading relationship with the broker in question. It is really dumb, but I’ve seen a lot of that in the last few years.
You’ve also seen all the intellectual horsepower on the street move to the buy side in the last 5-10 years. Part of the success of activist hedge funds is due to the fact that it is easy for them to find each other now and broadcast a different message from management’s tune. There are no effective chokepoints for information anymore, and the sellside is just one more voice out there and one that generally has very low credibility.
The New York Times has a short article on the rapid demise of the CRT as a display technology. Cathode Ray Tubes (CRT’s, that big box I still call a TV) are headed the same way as the 8-track, pulse dialing, typewriter, and mechanical adding machine.
It feels like the bulk of technological evolution in the last 20 years has been more about enabling entirely new applications, and less about simply replacing the technology of old. I wonder if this is a sustainable trend, and if the pendelum is poised to swing back.
I believe technology evolves in two ways:
Continue reading ‘Technology - Obsolescence vs. Empowerment’
Steve Jobs is speaking today. The world breathlessly awaits. The photo illustrates that his goal of global domination draws closer.
I think the second wildest fantasy of any marketing guy is to wield the power that Steve Jobs holds.
Continue reading ‘The Master of the Tech Universe is Speaking’
Credit Suisse discusses Portalplayer (PLAY) today in their morning note.
Michael Masdea now sees Portalplayer as a potential supplier for the Microsoft Zune player, and specifically highlights the existing relationship Portalplayer has with Microsoft.
Current MSFT relationship is key. For many months now, PLAY has been working with Microsoft to develop the Preface technology for laptops. Microsoft is putting significant marketing dollars behind Preface through the “Windows SideShow” name and the Vista launch. As the hardware PLAY ships for the Preface platform is very similar to what PLAY ships into MP3 players, we believe Microsoft will be more inclined to use PLAY chips for its own MP3 player.
This is a concept that we have seen, followed, and talked about for the last six months. It is refreshing to see that this concept is finally more broadly recognized.
Continue reading ‘Credit Suisse on PortalPlayer & Microsoft Relationship’
The slow motion disaster movie that is Applied Micro Circuits Corporation (AMCC) is still in theaters even though investors stopped buying tickets long ago.
AMCC announced this morning an all cash deal to buy Quake Technologies for $69M net. AMCC has managed to spend nearly $1BB in cash on a number of acquisitions, none of which have provided a return better than simply sticking the dollars in the bank. We feel that Quake will be yet another failed acquisition.
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